After breaking through a five-month downtrend, an analyst stated that the previous cycle's movements for Stellar (XLM) may soon repeat. The cryptocurrency has confirmed a breakout from a bullish reversal pattern and is expected to surge towards new targets.
Stellar breakout target $0.39
Against the backdrop of a market rally, Stellar (XLM) has broken through a key demand zone and has re-tested the $0.30 mark for the first time since March. The cryptocurrency has been in a downtrend since breaking a three-year high of $0.63 in November 2024.
During this year's correction, XLM fell 68% from its peak to a five-month low of $0.20. However, in late April, the market recovered, XLM broke the downward trend line, and attempted to confirm the breakout after closing above the $0.28 mark.
Last Friday, Stellar reclaimed the $0.29 resistance level and re-tested the $0.30 mark for the first time in nearly two months. Ali Martinez noted based on today's performance that Stellar is breaking out of an inverse head and shoulders pattern that has lasted for two months.
This pattern is a bullish reversal pattern, indicating that the price may shift from a downtrend to an uptrend. Earlier this week, the right shoulder of this pattern was forming, with the neckline around $0.29.
Breaking this pattern could see a 30% rise to the resistance level of $0.39, which was breached during the retracement in February.
Will XLM repeat historical trends?
Analyst Rekt Capital emphasized that the cryptocurrency confirmed the end of its months-long downtrend and broke through the downward channel.
According to the post, if XLM closes above its key range of $0.27 to $0.29 on a weekly basis, any dip into that range will be seen as a successful reclaim of that area as support to aid its move to higher ranges.
The analyst explained that reclaiming the $0.27-$0.29 range is crucial because it is a 'historical demand zone within the monthly time frame.' In the past, turning this area into support during bull markets allowed Stellar to bounce back to the $0.37-$0.40 level.
In 2021, after re-testing the key demand zone and breaking the $0.37 mark, the cryptocurrency rebounded to a cycle high of $0.80. Similarly, after breaking through that area, it set a historical high (ATH) of $0.87.
If XLM were to repeat its past performance and bounce back to the next resistance level, it must retrace and confirm that level to continue its historical trend. 'Therefore, over time, XLM's retracement could challenge the blue high of $0.52,' Rekt Capital concluded.
Meanwhile, analyst CW pointed out that after breaking the upper line of the downward channel, Stellar will face resistance at two sell-off barriers, one between $0.34 and $0.38, and another near the $0.47 to $0.70 area.
At the time of writing, Stellar is trading at $0.296, up 2% daily.
