Stellar (XLM) Tests Critical Support at $0.21 as Smart Contract Momentum Builds
Market Structure Shifts Higher
- Stellar (XLM) is currently trading at $0.2125, having lost 3.65% on the day.
- The retreat was minor compared to the declines on other altcoins.
- XLM has shown resilience through its ability to hold above the key support region of $0.205 to $0.21.
This level has been retested six times this year alone, and so far, the bears have failed to breach it.
Recently, XLM has been relatively weak compared to the broader cryptocurrency markets. While Bitcoin and Ether have pushed to new all-time highs XLM put in a lackluster response and managed only a 50% gain from its September low to November high before consolidating under the September level, despite some altcoins pushing to new yearly highs.
The next level to watch is the support zone between $0.18718 and $0.2063. This price zone has acted as strong resistance after the previous breakdown on November 24. A convincing daily close below $0.18718 could see XLM fall to $0.13 to $0.15 with a projected midpoint between the two potential support levels at $0.14.
| Metric | Value |
|---|---|
| Asset | STELLAR (XLM) |
| Current Price | $0.21 |
| Weekly Performance | 0.58% |
| Monthly Performance | -16.73% |
| RSI (Relative Strength Index) | 36.5 |
| ADX (Average Directional Index) | 35.1 |
| MACD (MACD Level) | -0.01 |
| CCI (Commodity Channel Index, 20-period) | -79.76 |
RSI at 36.5 Signals First Oversold Territory Since August Washout
The current low RSI is at odds with prices holding above that August low. That could imply that the selling pressure that step-changed the market structure in August (turning $0.16 from strong support into firm resistance) should be somewhat tempered this time around. If there’s less urgency by Algorand sellers to exit this time, that opens greater potential for a fast price recovery.
Therefore, while aggressive traders could look to accumulate between the $0.28 and $0.30 levels, the alert swing trader might simply target RSI 40 (currently $0.31) to provide additional confirmation.
ADX at 35.1 Shows Mature Downtrend Nearing Exhaustion Point
With an ADX reading of 35.1, the entry simply conveys that “yes, the downtrend has been severe, but it’s about to get down to the nitty-gritty here the types of climax and reversal points that oftentimes form” .
Day traders will want to pay close attention to this ADX reading as it’s a near replica of the setup we saw in August where similar trend exhaustion preceded a multi-week consolidation. The smart contract news hitting during peak capitulation is an interesting dynamic as fundamental improvements meeting technical exhaustion typically sees mean reversion trades over continuation shorts.
20-Day EMA at $0.249 Becomes Key Resistance After Support Flip
The EMA ribbons also suggest a clear loss of momentum, divergence increases, and the ribbons widen. This more so emphasizes the severance of the ribbon support and a break in the general uptrend. If XLM can recover the ribbon support and the aforementioned EMAs, then $0.30 becomes the immediate upside target.
Even though the daily MACD remains a bear cross, the histogram continues to tick upward, and the RSI rises from its most oversold conditions on this exchange. BAND has reclaimed the broken parabolic advance (white dotted line) but needs to hold this support while pushing higher to expose the next resistance areas and flip the macro trend back to bullish.
$0.21 Support Tested Six Times – Marshall Islands Initiative Adds Fundamental Floor
The support did appear to hold, with the four-hour candle closing right at the top of the range, which would have seen traders require warnings to load up for the potential downside washout. It remains the key level to watch and failure to hold would target $0.18 initially. The bulls did put in an impressive rally over the weekend but this resulted in a 40% move, which would require a perfect trade to have captured the entire swing. The most likely scenario is the opportunity to short this on the way back down.
Sellers have placed resistance at levels between the monthly pivot at $0.259 and December’s breakdown level at $0.263. The considerable distance between the current price and the initial resistance level results in an imbalanced risk-reward situation, with approximately a 22% increase to resistance and only a 3% decrease to the loss of support.
The market structure shows that, as price has been making lower highs, the support floor remains unchanged since June. This is a continuation pattern, and such patterns tend to resolve themselves in the direction of the preceding trend, which was bullish for XLM since the August lows. Putting this together with oversold levels and upcoming smart contract drivers, the odds appear to be in favor of buyers who don’t mind taking the risk of a support break.
Smart Contract Catalyst Could Spark Recovery Above $0.249 EMA Confluence
Bulls need to break this resistance area to gain back control. The Soroban project shows great potential to surpass this crucial EMA confluence giving Stellar the necessary boost to recover fully, attracting developers that might not have considered the platform before. The first target of a successful reclaim would be the monthly pivot at $0.259.
If the $0.207 support were to give way on the seventh or eighth attempt, it would not support a final breakdown. Instead, we’d expect another massive liquidation wick, which if it occurs will force all these weak hands to sell before the next markup.
Based on the technical setup and increasing smart contract adoption, the most likely short-term scenario has XLM ranging from $0.207-$0.249 as momentum oscillators cool off from overbought readings. The oversold RSI, overbought ADX, along with organic support and fundamental drivers lead to an environment where conservative bulls usually profit over the following month.
