XLM price has been trending sharply higher since mid-November. However, the momentum was briefly interrupted over the weekend as the broader cryptocurrency market followed Bitcoin’s downtrend. Nonetheless, the market resumed gains on Wednesday, with Stellar breaking out of a bullish flag pattern. We discussed why this could be a path to the $1 mark.
XLM Price Sparks Parabolic Rally to $1
A consolidation phase typically occurs after an exponential price rally, like what Stellar’s price has experienced recently. A brief period of profit-taking forms a “flag pattern.” In a market rally, a breakout of a flag pattern implies a return to the prior upward trajectory. In XLM’s case, the breakout occurred on Wednesday, and continued price gains on Thursday added credibility to the bullish continuation pattern.
To get a price target in a bullish flag pattern, we measure the “flag pole,” which is the distance from the low of the upside move to the high of the flag’s formation point. We then use the same measurement to extrapolate an upside target starting from the flag’s lower trendline. Applying this method on the four-hour XLM price prediction chart below suggests that prices could go as high as $1.11
In addition to the technical outlook leaning to the upside, a number of on-chain indicators also signal bullish control of the market, as discussed below.
Rising open interest indicates increased demand for XLM
Open interest measures the value of options or futures contracts that have not expired or been exercised/closed by investors. In the case of XLM, the value of open interest for perpetual contracts rose by 3.2% in the 24 hours prior to writing this article, as shown in the chart below. This suggests that more investors predict that the value of XLM will continue to rise in the coming days. This sentiment adds support to the demand side of the token.
XLM DeFi TVL surge highlights growing adoption
According to the latest data from DeFiLlama, the total locked value (TVL) in the Stellar DeFi ecosystem has surged 63.5% in the past 7 days to $56.18 million. This is a good sign for XLM price as it indicates an increase in its utility in financial transactions.
Bullish momentum in Stellar price targets $0.50 support
The RSI indicator reading is 53, indicating a higher upside potential. The next key hurdle for the XLM price is $0.50, which is a psychological level. A break above this level will confirm the bullish bias. The coin’s immediate support is at $0.48, which is the lower limit of the recent consolidation.
A break below this level would invalidate the upside thesis and could open the way for a test of $0.40, near the last breakout area before the parabola.
