October 3, 2022


Disclaimer: The results of the following analysis are the author’s opinions only and should not be considered investment advice.

excellent [XLM] Efforts to weaken the four-month trendline resistance (white, dashed) came to fruition as the bulls flipped it to support after their latest rally. The recent buying rebound necessitated a bullish wedge structure, which is looking to retest the $0.125 ceiling.

A convincing close above its current pattern would place it to nullify the bearish trends. The bulls need to increase buying volumes to maintain a steady buying streak. At the time of writing, XLM is trading at $0.124, up 3.36% in the last 24 hours.

XLM daily chart

Source: TradingView, XLM / USD

The previous downtrend for XLM identified the four-month trend line support (previous resistance) on the daily chart. However, after falling towards a 20-month low on July 13, buyers regained their momentum.

As a result, the price action has jumped above the exponential moving averages in the near term. However, the 20 EMA (red) did not break above the 50 EMA (cyan) and confirms a strong bullish advantage. Such a crossover could increase the chances of a bearish reversal.

If the $0.12 resistance reignites the selling force, the alternative may see a slowdown phase within the pattern. However, Morning Star candles can help the bulls maintain their edge. A close beyond the $0.12 level will open the door for a test of the $0.135 level.

However, a possible bearish recovery at the $0.12 level could delay the near-term recovery outlook. Any close below the pattern may see a slowdown phase near the point of control (POC, red).

Logic

Source: TradingView, XLM / USD

The RSI took a bullish stance, especially after flipping the 57 mark into immediate support. A position above this level will reflect a favorable environment for continued growth.

Moreover, OBV has resonated with increased buying pressure but has been unable to replicate price action at higher highs over the past week. Thus, any reversals on the OBV could confirm a bearish divergence.

The DMI lines anticipated a strong buying advantage while the DI -DI line is still heading south. However, the ADX indicator has shown a rather weak directional trend for XLM.

conclusion

Given the rising wedge structure is approaching the $0.125 maximum, sellers will be looking to evoke their edge. A close above this resistance could encourage a downside reversal. The objectives will remain as discussed.

Finally, investors/traders should take into account the broader market sentiment and on-chain developments to make a profitable move.



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