The Stellar (XLM) price has had a series of strong daily closing sessions, reflecting significant buying pressure and increasing investor confidence.
From a technical perspective, market momentum has completely tilted towards the buyers, but XLM is approaching an area that could pose obstacles, where technical resistance and momentum in the order book slow down the current upward trend.
The closest daily candles indicate a strong upward movement, surpassing both the 9-day and 20-day exponential moving averages (EMA). This price action pattern – where the short-term EMA rises distinctly compared to the long-term EMA – often signals that a strong bullish trend is forming. The current position between the EMA lines confirms that the bulls are in control of the market and the trend is accelerating.
The MACD indicator has also shifted from a weak bullish crossover to a clear upward trend, with gradually expanding histogram bars, reflecting that XLM's bullish momentum is not only strong but also sustained over multiple trading sessions.
Concurrently, the Relative Strength Index (RSI) has moved deeply into the overbought territory, exceeding the 70 threshold. This strength level indicates that investor confidence in the upward trend is very high, but it also warns of the risk that XLM may be overextended and might need a short-term correction.
XLM's resistance zones: Is the price about to hit the 'ceiling'?
XLM is approaching a crucial resistance area at $0.402 - which was a strong ceiling during previous rallies. If this area is surpassed, the price may surge to the next resistance levels at $0.428 and $0.45.
However, before achieving that, XLM needs to break through the dense 'ask walls' in the order book — particularly at $0.394 and $0.377. These are areas with a large volume of sell orders, and if liquidity is not absorbed here, the price may stagnate or experience a temporary correction.
Notably, if XLM breaks through the ask wall at $0.394, the price could rise approximately 5% to $0.402, and if momentum continues, it could potentially rise another 15% to the $0.433 region.
Support Levels: Key 'Price Floors' to Monitor
On the contrary, if a correction occurs, XLM currently has several important support zones. The nearest support level is around $0.356, just above the current price range. If this area is breached, the price could drop further to $0.331 and $0.323.
However, the real risk lies in the order book. There are currently three large 'bid walls' creating a support buffer for XLM at levels: $0.34, $0.33, and $0.299. Notably, these walls indicate very strong demand, especially at the $0.33 level where over 1.5 million XLM are waiting to be purchased. If the bid walls hold strong, the price could rebound from here.
However, if the bid wall at $0.33 is broken, the market may witness a significant correction of up to 12%, and if it continues to lose the $0.299 mark, the risk of a deeper drop of up to 20% will emerge.
XLM Trading Strategy: Prioritize Long Orders but Exercise Caution
In terms of strategy, the current technical signals are supporting a Long trend. Moving averages and the MACD indicator show momentum leaning towards the bulls, while the order book also records strong accumulation zones below. However, the RSI is in the overbought zone, indicating that any subsequent price increase may come with short-term volatility.
For the Long strategy, a potential entry point appears when the price breaks above the ask wall at $0.394, accompanied by confirmation from trading volume. Price targets include $0.402 in the short term and $0.428, $0.45 if the upward momentum continues. The stop-loss order should be set below the support zone of $0.356 or below the support wall at $0.34 to manage risk.
For the Short strategy, counter-trend traders may look for rejection signals around the $0.394 or $0.402 areas, especially if the RSI continues to show overbought conditions and trading volume weakens. However, it is important to note that shorting against a strong upward trend like the current one carries high risk, so careful risk management and additional confirmation signals, such as bearish RSI divergence or MACD cross-down, are needed.
Conclusion
The current technical picture of XLM clearly leans towards a bullish trend, with price action supported by strong trend indicators and dense support zones in the order book. However, the price approaching key resistance zones alongside overbought signals also means that traders need to choose carefully and maintain discipline.
If a successful breakout occurs, the market could open up a new strong bullish phase. Conversely, if the price is rejected at the resistance zone, short-term traders may take the opportunity to trade in a corrective direction.