After a dormant 2023 and 2024, the XLM price increased by over 600% in November, leading the crypto market alongside XRP that month.
While the price has fallen over 65%, the downward movement is gradual and controlled relative to its previous rally.
Such movement usually suggests that the decrease is simply a response to the previous increase.
Is this the case, and will Stellar break out from its pattern, resuming its previous ascent? Let’s find out.
XLM’s Bullish Pattern
The XLM price has fallen inside a descending wedge since its cycle high of $0.636 on Nov. 24, 2024.
The descending wedge is a bullish pattern, meaning that it leads to breakouts most of the time.
On April 7, the XLM price bounced at the wedge’s support trend line, creating a bullish candlestick.
In addition, it validated the 0.786 Fibonacci retracement support level and the $0.21 horizontal support area.
The wedge pattern ends soon, so a decisive movement outside is expected.
Despite the seemingly bullish price action, technical indicators do not confirm the trend reversal.
The Moving Average Convergence/Divergence (MACD) has generated a bullish divergence (orange) and is increasing.
However, the Relative Strength Index (RSI) is bearish, trending below 50.
So, the daily time frame XLM analysis leans bullish but does not yet confirm the bullish trend reversal.
Can XLM Break Out?
Similarly to the price action, the wave count gives a bullish prediction, indicating that XLM will break out.
According to the count, XLM completed a five-wave downward movement (red), which started in November 2024.
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If the count is accurate, the XLM trend will still be bearish, but a significant rally will follow.
If XLM has started the rally, it will likely create an upward A-B-C structure (green), ending at the $0.37 or $0.42 resistances.
The latter target is more critical since it is both a horizontal and Fibonacci resistance level.
The Fib time zone tool suggests the upward movement could continue until June.
XLM Breakout Incoming
The daily time frame price action, indicator readings, and wave count suggest the bounce will continue.
Additionally, there is positive XLM news this week since Stellar announced that it will be the main sponsor of the Paris Blockchain Week in 2025.
If Stellar breaks out from the wedge, it could increase toward the next resistance at $0.47 and $0.42.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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