Stellar: Bulls can take advantage of this opportunity on XLM charts

Warning: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.

Stellar (XLM), at press time, was hovering near the lower boundary of its fork and walking on thin ice after its recent moves. A close below Pitchfork could escalate into unwanted losses by paving the way towards the $0.12 area.

To reignite a short-term bull run, the altcoin needs to renew its buying pressure and find new highs beyond the constraints of its EMA ribbons. At press time, XLM was trading at $0.13669, up 2.4% in the past 24 hours.

XLM 4 hour chart

Source: TradingView, XLM/USD

XLM made a quick U-turn from the $0.2396 level and dipped to retest its low of $0.1693. Interestingly, the bulls had held this floor for over 16 months. Alas, the prevailing bearish strength gave the sellers enough momentum to propel a 40.73% retracement from May 7-12.

After rising from the ashes of its 17-month low on May 12, the EMA Ribbons have tightened most recovery attempts over the past two days. As the bears hold back from giving up their edge at the 35 EMA, the buyers are trying to build pressure in the $0.13 area.

The next candlesticks would give more information about bullish intentions potentially affecting the trend in the near future. An immediate rally could smack straight into the 50 EMA in the $0.14 area before a near-term reversal. On the other hand, any close below the 20 EMA could expose the altcoin to a test of the $0.128 support.

Reasoning

Source: TradingView, XLM/USD

The neutral RSI rebounded from the oversold lows and endeavored to reverse its median resistance. Any close above equilibrium could accelerate the pace of its recovery process in the coming sessions.

During the previous day, the bearish CMF reached higher highs in the 4-hour time frame. This trajectory has diverged bearishly with the south trending price action spikes.

Conclusion

Given the scarcity of buying volumes and the potential for bearish divergence on the CMF, XLM’s recovery phase may see a short-term pause in its EMA ribbons. However, the RSI’s close above the 51 level would position the alt for a more robust rally in the days ahead.

Also, investors/traders should consider the general market sentiment and on-chain developments to make a profitable decision.