Since Tuesday, March 11, Stellar (XLM) seems to have put a stop to the correction it experience since February. In a build-up to that, XLM’s price added another 12% increase in the last 24 hours.
This sustained rally has reignited bullish sentiment, with the altcoin showing potential for further upside. Will XLM extend this breakout, or is this just a temporary relief rally?
XLM Rises After Wedge Breakout
Between March 6 and 10, XLM flashed five daily bearish candlesticks as the price moved from $0.30 to $0.24. This decline happened due to selling pressure and bearish sentiment in the market.
Furthermore, the development led to XLM’s price hitting lower highs and lows, eventually forming a falling wedge.
A falling wedge is a bullish pattern that forms when an asset price consolidates between two converging downward trendlines.
It typically signals a potential reversal from a downtrend and suggests a possible price increase once the upper trendline is broken.
On the daily chart, XLM’s price has broken above the upper trendline of the wedge and has risen to $0.28. This breakout indicates that the altcoin might continue to jump as long as buying pressure does not fade.
Amid this recovery, both the Chaikin Money Flow (CMF) and Money Flow Index (MFI) have broken above their previous downtrends.
For context, the CMF measures the level of accumulation and distribution while the MFI gauges the buying and selling volume.
Open Interest Climbs
Therefore, the rise in the indicators’ readings indicates increasing buying pressure around XLM. If sustained, the MFI and CMF might rise above the midpoint and confirm XLM’s extended upswing.
This potential is also reflected in the altcoin’s Open Interest (OI). According to Santiment, XLM’s OI has risen from $67 million to $78.75 million within the last 24 hours.
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This hike indicates rising exposure to XLM in the derivatives market.
Historically, an increase in XLM’s Open Interest strengthens the uptrend. Therefore, if the OI continues to jump, so will XLM’s price.
XLM Price Targets $0.38
Looking at the 4-hour chart, the Awesome Oscillator (AO) has switched to the positive region it languished in the red for almost a week. This move to the positive region indicates rising bullish momentum.
Therefore, if the AO reading continues to rise, XLM will likely trade higher.
Using the Fibonacci levels, an increase in buying pressure and bullish momentum could drive XLM’s price toward $0.38 at the 0.618 Fib level.
Should demand for the token intensify, the value could reach $0.48. On the other hand, XLM could fall to $0.23 if the token fails to break above the resistance of $0.32.
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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