Key Takeaways
Stellar (XLM) recently showed strong bullish momentum, breaking out from a descending wedge pattern.
However, the price faces resistance near key horizontal levels, indicating a potential short-term consolidation before the next major move.
The daily chart of XLM shows a significant breakout from a descending wedge, pushing the price from a low of $0.32 on Dec. 30 to a recent high of $0.51.
This movement aligns with a bullish Relative Strength Index (RSI) recovery, suggesting strong buying interest.
However, the RSI approached overbought conditions, so we saw another downturn.
From an Elliott Wave perspective, the structure indicates that XLM completed a five-wave impulse, followed by a corrective ABCDE pattern.
This correction bottomed out near the $0.32 level in late December, leading to upward movement. If this count holds, XLM is likely in the early stages of a new impulsive wave.
Despite the breakout, XLM faces a strong horizontal resistance zone at $0.45–$0.50, historically a major supply area.
A successful close above this range would confirm further upside potential, while failure to do so may result in a retest of key support levels around $0.40.
Interacting with the horizontal support zone on Jan 30 resulted in a 13% upward spike. This could be an early sign of the development of a new uptrend, but further confirmation is needed.
The one-hour chart provides a more detailed outlook, highlighting XLM’s current wave structure and Fibonacci projections.
The recent breakout is part of a developing five-wave impulse, with Wave 3 potentially reaching the 1.618 Fibonacci extension at $0.62.
If the momentum continues, a full extension could push Wave 5 toward the $0.70 area targets.
However, a corrective pullback (Wave 4) may unfold before this happens, targeting support levels around $0.457.
These areas align with the previous high made in November, and the price will likely face resistance at this level again before it can continue moving up.
If XLM holds above $0.40, the bullish outlook remains intact. A decisive move beyond $0.50 would likely confirm an extended rally toward the next major resistance levels at $0.57 and beyond.
On the downside, failure to hold key support could lead to deeper retracements, possibly testing the $0.38 or $0.343 levels.