Stellar's XLM: Bouncing Back or Bull Trap?

Stellar (XLM) has experienced a significant price movement over the past few months, first rallying strongly in late 2024 before entering a prolonged correction phase. After reaching a high near $0.60, XLM has since retraced, recently finding support around $0.28-$0.30. However, with a slight 6.50% bounce in the latest session, traders are now asking: Is Stellar about to break out of its downtrend, or is this just a temporary relief rally before another leg down?

This Stellar price prediction will explore key support and resistance levels, technical indicators, and potential price scenarios to determine whether XLM can sustain its recovery or if further declines are ahead.

XLM’s latest price movement suggests early signs of a possible recovery, as the coin has bounced from its recent support zone around $0.28-$0.30 and is now trading around $0.3193. The 6.50% daily increase could indicate renewed buying interest, but the overall structure remains cautiously bearish, with lower highs and lower lows still intact.

One crucial factor to watch is whether this bounce can hold. If XLM can sustain gains and establish higher support, it might signal the start of a trend reversal. However, if selling pressure increases at key resistance levels, this move could turn into another bull trap before further declines.

The Relative Strength Index (RSI) is currently at 46.39, a notable recovery from its recent lows. Although this suggests that XLM price is no longer in oversold territory, it remains below the 50-neutral level, meaning bullish momentum is not yet confirmed.

For a true reversal, the RSI needs to break above 50 and sustain a higher trend, signaling that buyers are taking control. If RSI remains under 50, XLM might continue consolidating or even retest lower supports before attempting a stronger rally.

The most critical immediate support for XLM is around $0.28-$0.30, where the price recently bounced. If this level holds, XLM could build a base for further upward movement. However, a break below this range would expose the next major support at $0.20, which served as a previous accumulation zone before the November rally.

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