Stellar (XLM) surges 109.7% to $0.515, faces potential pullback

Stellar (XLM) has recently surged to its January high of $0.515, following a remarkable 109.7% rally within a single week. This impressive performance has brought the cryptocurrency to a critical resistance level, which it last reached in mid-January. Despite this bullish momentum, there are signs of a potential pullback due to bearish divergence and profit-taking.

On the 4-hour chart, a bearish divergence has emerged, indicating that the market conditions are overextended. This divergence, where the price continues to rise but momentum indicators start to decline, often signals a potential reversal or a cooling-off period. This has raised caution among traders, who are now watching for any signs of exhaustion in the bullish trend.

Despite these short-term headwinds, Stellar’s weekly chart paints a clearly bullish narrative. Since the first structural break in May, the altcoin has posted a series of higher highs and higher lows. The recent move from $0.216 to $0.515 has only solidified this uptrend. Even if XLM retraces from current levels, technical analysts suggest that the bullish structure will hold firm as long as prices remain above $0.28. This makes any correction potentially healthy rather than bearish.

Analysts suggest that a healthy retracement toward the $0.364 support zone could offer a new buying opportunity before targeting higher levels. Using Fibonacci retracement levels, the 50% retracement of the latest rally aligns perfectly with the February 2025 high at $0.364, making it the next logical support and demand zone. Traders eyeing entry points might consider this level ideal for buying if the price cools further.

Supporting this outlook, the Accumulation/Distribution (A/D) indicator has reached new highs, reflecting significant recent buying interest. Likewise, the Chaikin Money Flow (CMF) remains well above +0.05, confirming strong capital inflows. This suggests that despite the potential for a pullback, there is still strong underlying support for Stellar’s price.

In current conditions, consolidation is unlikely. Instead, the price is expected to gravitate rapidly toward these “magnetic” liquidity zones due to heightened speculative interest. Traders should monitor liquidity zones closely and prepare for rapid price shifts rather than sideways movement. Stellar’s rally to $0.515 is a strong show of bullish momentum, but a cooling-off phase may be imminent due to technical overextension. A retracement toward $0.364 could offer a healthy reset before any move toward new highs.