XLM Price Analysis: Stellar Eyes Breakout While Order Book Tightens

The XLM price has posted a string of strong daily closes, reflecting significant buying pressure and rising investor confidence. 

From a technical perspective, the momentum has shifted decisively into bullish territory, but XLM price action is fast approaching a zone of potential congestion where resistance and order book dynamics could slow its climb.

The most recent daily candles show aggressive upward movement, easily outpacing both the 9-day and 20-day exponential moving averages. This type of price behavior, where the short-term EMA sharply diverges above the longer-term EMA, usually signals the onset of a strong trend. The current alignment of EMAs confirms that the bulls are in control, and the trend is accelerating.

The MACD indicator has moved from a weak positive crossover into a steadily expanding bullish trend. The histogram bars are widening, showing that XLM price momentum is not only building but also sustaining over multiple sessions. At the same time, the Relative Strength Index (RSI) has entered overbought territory, climbing deep above the 70 threshold. This level of strength is indicative of sustained bullish conviction, but it also raises caution for potential overextension.

Daily chart for XLM/USDT (Source: TradingView)

XLM Resistance Zones: Price Reaching the Ceiling?

The XLM price is approaching the $0.40250 resistance level, which historically acted as a ceiling during previous rallies. Clearing this level could ignite a sharp push toward the next resistance levels at $0.42860 and $0.45040. However, it must first overcome key ask walls in the order book—most notably at $0.39450 and $0.37760. These zones are stacked with sell orders, and failure to absorb this liquidity could lead to a temporary stall or even a pullback.

Interestingly, if XLM manages to break through the $0.39450 wall, the price could rally approximately 5% toward the $0.40250 resistance, and if momentum continues, up to 15% further to the $0.43300 level.

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Support Levels: Critical Floors Below

On the downside, the XLM price has multiple support levels that may come into play during any pullback. Immediate support lies near $0.35610, just above the current price zone. A break below this level could expose the asset to further downside toward $0.33190 and $0.32350.

But the real risk lies in the order book. Three large bid walls currently provide a cushion for the XLM price: at $0.34000, $0.33000, and $0.29990. These walls represent deep pools of demand, particularly the $0.33000 level with over 1.5 million XLM units waiting to be bought. If these walls hold, they could serve as bounce points for the bulls. But if the $0.33000 wall fails, it could open the door for a steep 12% correction, and a break of $0.29990 would signify an even deeper 20% drawdown risk.

XLM Trading Strategy: Long Bias with Caution

From a strategic standpoint, the technicals favor a long bias. The moving averages and MACD confirm momentum is in the bulls’ favor, and the order book shows strong accumulation zones underneath. However, the RSI in overbought territory suggests that any further upward move might come with shorter-term volatility.

For long trades, potential entry opportunities could arise on a breakout above the $0.39450 ask wall with confirmation of volume. Targets would include $0.40250 initially, with secondary targets at $0.42860 and $0.45040 if momentum continues. Stops could be considered below $0.35610 or just under the $0.34000 support wall to manage risk.

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For short trades, contrarian traders may look for signs of rejection around $0.39450 or $0.40250, especially if the RSI remains overheated and volume dries up. However, shorting against this kind of momentum requires tight risk controls and confirmation, such as a bearish divergence in RSI or a MACD crossover.

Conclusion

The technical picture for the XLM price is undeniably bullish, with XLM price action supported by strong trend indicators and a thick cushion of support in the order book. However, rising into key resistance zones with overbought signals means that traders must be selective and disciplined. A breakout could open the floodgates to the next leg higher, while a rejection may offer short-term traders a counter-trend opportunity.

Disclaimer: The information presented in this article is for informational and educational purposes only. It does not constitute financial advice. Ecoinimist is not responsible for any losses incurred. Readers should exercise caution before acting on this content.