Stellar Lumens (XLM), the native cryptocurrency of the Stellar network, has faced a corrective phase over the last three months, with its price dropping by approximately 34%. However, technical patterns and strong network fundamentals suggest the possibility of a notable reversal in the near future. Here’s why analysts believe a 30% rally toward the $0.33 resistance level might be on the horizon.
Technical Analysis: Inverse Head and Shoulders Pattern Emerges
XLM is showcasing a classic bullish reversal pattern known as an inverse head and shoulders on its daily chart. This pattern began forming in November, creating the left shoulder, followed by the head in late December, and the right shoulder materializing in January.
Technical analysts often interpret this pattern as a precursor to upward price momentum—provided it is confirmed by a breakout above the neckline resistance. If this occurs, the measured target derived from the depth of the pattern projects a 30% rally, aiming for the $0.33 resistance level. However, traders are advised to wait for proper volume confirmation before entering positions.
Smart Money Indicators Suggest Accumulation
Another compelling signal comes from the Chaikin Money Flow (CMF), which has maintained positive readings during the correction. Positive CMF readings typically indicate that buyers are actively absorbing selling pressure, hinting at ‘smart money’ accumulation even amidst price declines.
Additionally, the Money Flow Index (MFI), an oscillator that combines price and volume data, shows a bullish divergence. While XLM’s price has made lower lows, the MFI has held higher levels. This divergence often precedes significant reversals in market trends, further supporting the bullish outlook.
Fundamental Growth: Real-World Asset Value Surges
On the Stellar blockchain, Real-World Asset (RWA) value has grown by 11% since late December, now nearing $986 million. This growth highlights increasing utility and adoption of the Stellar network for institutional and enterprise use-cases rather than purely speculative trading.
Rising network fundamentals provide essential support for price appreciation as they strengthen the platform’s credibility and use cases. It’s clear that Stellar is transitioning toward becoming a blockchain of choice for real-world applications.
Final Thoughts
The combination of bullish technical patterns, strong accumulation signals, and robust network growth creates an optimistic outlook for XLM. However, traders should remain cautious and look for a breakout confirmation accompanied by rising trading volume before taking action.
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