Stellar Lumens [XLM] experienced a significant surge of 45% in the early part of January before retracing some of its gains. With the recent downturn in the market, there arises a potential buying opportunity for swing traders and investors alike.
Having surged from $0.30 to nearly 50 cents, XLM is currently undergoing a pullback that seems to be approaching critical levels which could attract bullish interest once again.
Forecasting Stellar Lumens Price Fluctuations
The bullish momentum generated at the start of the year resulted in a shift towards a bullish market structure on the daily chart. Any indication of a retracement falling below the recent low of $0.32 may alter this structure.
As long as this shift to a bearish market structure does not occur, the current outlook appears favorable for bulls.
The recent pullback of roughly 18% has come close to the pivotal levels of $0.36, with support established in December preventing a further decline to $0.30.
These two levels could serve as re-entry points for bulls looking to breach the overhead supply positioned below $0.50 (highlighted in red). A bearish scenario would emerge if XLM were to extend its decline below $0.30.
The $0.30 support level receives additional confirmation from the weekly charts, designating the cyan area as a decisive region that could trigger a price rebound if successfully defended.
Potential Upsurge in XLM Price due to Liquidity Attraction
Examining liquidity from a sweeping perspective reveals two notable upside levels to monitor. The initial level falls within the range of $0.43 to $0.45, followed by a second level at $0.48.
Typically, areas rich in liquidity often pull price action towards them, acting as significant points of interest. If this holds true, these could represent the primary upside objectives for an anticipated XLM recovery.
Interestingly, the higher liquidity zone coincides with the supply area positioned below $0.50 on the price charts.
As a strategy, one could consider securing partial profits upon hitting the initial target, and closing out the rest as the price approaches the $0.48-$0.50 range.
In summary, the market structure of XLM and the heatmap of liquidation imply a promising buying opportunity if the pullback extends towards $0.30.
However, a sustained decline below $0.30 would encourage sellers and negate the bullish outlook.
Disclaimer: The views expressed do not constitute financial advice, investment guidance, trading suggestions, or any other professional counsel, and are solely the opinion of the author.