Author: Toon Pierre
Stellar has been on a tear lately, its price blasting through over 118% in one week to a multi-year high of $0.24. It has once again stoked interest in the cryptocurrency market on whether XLM is well-positioned for further big growth. A look into some of the key drivers behind the recent price action, current market structure, and key levels to look for if one wants to buy the dip.
Key Drivers Behind XLM Price Surge
Technical Breakout and Golden Cross
This rally was catalyzed by a breakout from a long-standing descending channel wherein XLM breached the key resistance levels at $0.1236. This technical breakout was further validated by a "golden cross" on the charts, where the 50-day moving average crosses above the 200-day moving average-a bullish signal that indicates sustained upward momentum.
Correlation with XRP's Momentum
Historically, XLM has shared a price correlation with XRP, and after the latter had broken through $1 on favorable regulatory news, the former benefited from its impetus. This spillover effect was further helped by whale activity and increased trading volumes to push Stellar's market cap over $7 billion.
Market Sentiment and Liquidations
The strong bullish sentiment was underlined by growing open interest in the XLM derivatives market and the liquidation of more than $975,000 worth of shorts. This was further amplified by forced buybacks from short sellers.
Current Market Analysis
This recent rally catapulted XLM into the top 20 cryptocurrencies by market capitalization at a peak price of $0.2533. Such strength usually brings about sudden and sometimes violent short-term volatility. The Bollinger Bands expand on the technical charts, an indication of further upward movements. However, the social volume is way down, and it would seem that this rally may be institution-driven and not retail-driven.
This was despite gains, and a slight retracement has since been seen. The price of XLM has retraced a little to allow strategic investors to capitalize on lower entry points. The $0.107 - $0.115 zone, previously acting as resistance, is now critical support and an optimal buy zone.
Optimal Levels to Buy the Dip
To invest in XLM, the following levels can provide decent entry:
- $0.107 - $0.115: This is an important support area, one that was, at one point in time, resistance. A pullback to the above-mentioned levels could indicate a great buy if the support holds up.
- $0.132 - $0.135: This area coincides with regions of heavy amounts of liquidation. A pullback toward these areas may also be a good spot for entry, as well, especially for short-term traders.
Long-Term Outlook
Technical indicators and market dynamics point to further upside momentum in XLM, though this further upside faces resistance at $0.25 and $0.27. Once pierced, these resistances could open targets around $0.44 and $0.80. However, the volatility of the market underlines the need to apply risk management by traders and investors.
Monitoring the greater market trends, Bitcoin's price action, and regulatory developments will be key to gaging XLM's trajectory. If retail interest comes in, the altcoin rally can be furthered and become one of the hot assets within the next months.
Conclusion
Stellar has been one of the most resilient and fastest-growing cryptocurrencies in the market. But more lately, it has surged on the back of its technical breakthroughs, correlation with the momentum of XRP, and increased institutional interest in it. Demonstrating potential for its long-term sustainability, the rally has tossed volatility into the short term. Stranded between crucial support lines ranging from $0.107 to $0.135, strategic investors will, therefore, have ample opportunities for entry.
While XLM faces resistance at $0.25 and $0.27, its future trajectory depends on broader market dynamics, which include Bitcoin's performance and changes in regulation. This could be further driven by retail participation that would help solidify its position among altcoins. At this point, for investors, as much as the optimism is great, prudent risk management is necessary as the market further unfolds.
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