Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.
Stellar (XLM) was approaching to retest $0.168 within a falling wedge and was close to a make-or-break situation in the coming times. A move below its immediate support could spiral into an undesired loss by opening a route to $0.1617.
A likely upswing from its immediate floor would position the altcoin for a revival rally in the near term. At press time, XLM traded at $0.1739, up by 1.91% in the last 24 hours.
XLM Daily Chart
Source: TradingView, XLM/USD
Since XLM did a one-eighty from the $0.8-level and plunged to consolidate between the $0.168-$0.39 range for over a year. This bearish phase marked a down-channel (white) on its daily chart as the alt lost nearly 63.4% (from 10 November) and hit its 13-month low on 24 February.
Meanwhile, the EMA ribbons constricted most recovery over the last five months. However, the mid-March bullish revival propelled a much-desired hike that halted at the $0.23-level. Since then, the sellers have recouped their force while triggering a falling wedge decline over the last month.
As this wedge approached the 16-month support at the $0.1688, XLM could repeat history by igniting a short-term bull run. But with the rising gap between the EMA ribbons, this rally would likely be halted by the bonds of its Point of Control (POC, red).
Rationale
Source: TradingView, XLM/USD
The RSI depicted a strong selling edge while witnessing a steep downward slide below the mid-line. A close below the 36-mark could propel a recovery from the 32-base.
Over the last four days, the bearish CMF pulled off higher peaks on the daily timeframe. Thus, revealing a bearish divergence with price. However, the OBV managed to keep its immediate grounds despite the recent sell-offs.
Conclusion
In view of the falling wedge setup alongside the sturdiness of the immediate support, XLM could eye to break out of the wedge to test its POC. But with a bearish divergence on the CMF, the alt could delay this recovery by retesting the immediate support.
Finally, the investors/traders should factor in the broader market sentiment and the on-chain developments to make a profitable move.
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