XLM rebounds from key support: Is recovery sustainable?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- XLM’s 11% pump from key support level eased the bearish momentum.
- Strong capital inflows could aid a sustained price recovery for XLM.
Stellar Lumens [XLM] rebounded off a key price level to ease the selling pressure on the altcoin. The $0.11 support level has been a strong defense for bulls with the first bullish rebound happening on 18 August.
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The second rebound from the same level highlighted the buying strength available at the $0.11 support. Thus, bulls could push on with a target to reach the July highs of $0.17 – $0.19.
Can a sustained recovery happen after the second retest of the critical support level?
After hitting the heights of $0.19 in mid-July, bears seized control of XLM’s price action. This led to a very bearish August as the selling pressure took price to the key support of $0.11.
The price action at the support showed that bears needed to flip this level to extend the bearish momentum. However, bulls stood strong with the latest retest of the support on 4 September producing an 11% price pump. In addition, the on-chart indicators suggested the possibility of further gains.
The Chaikin Money Flow (CMF) stood at +0.10 to signal increased capital inflows, which is typically a bullish sign. On the other hand, the Relative Strength Index (RSI) hovered at the neutral 50 mark to hint at decent demand for XLM.
A sustained rally can see bulls target the $0.14 to $0.15 price range, which was the lower high of the bearish downtrend. Alternatively, if bears crack this support, XLM would flip bearish in the long term, with sellers targeting the next support at $0.09.
Bears look to tame bulls in futures market
The tight margins on the exchange long/short ratio showed that sellers were actively out to stop the bullish rally. While longs edged toward the critical 50% flip point of the long/short ratio, sellers still held the advantage as of press time.
Read Stellar Lumens’ [XLM] Price Prediction 2023-24
Although the shorts’ advantage was slim, it showed that buyers needed to be careful to avoid being caught out by huge sell orders. Therefore, traders should track Bitcoin’s [BTC] price action before opening new positions.