Stellar's XLM token has seen a significant 7% surge in price over the past 24 hours. After spending most of August trading sideways between $0.10 and $0.12, XLM broke out above this range, currently trading at $0.1231. This price jump seems to be driven by a combination of positive fundamental news and technical price movements.
In this in-depth analysis, we will explore the key drivers behind this latest XLM rally. We will also look at the major support and resistance levels that traders should watch moving forward.
What's Behind The 7% Surge?
There are a few likely explanations for this sudden uptick in XLM price:
- Growing adoption: Stellar has seen increased adoption over the past month from businesses, especially in the payments sector. For example, in August, MoneyGram announced it would use the Stellar network for US DC transfers. Rising real-world usage is bullish for XLM price.
- Technical breakout: The move above $0.12 triggered buy orders and broke XLM out of its trading range. This momentum likely attracted further buyers looking to ride the breakout.
- Positive market conditions: The overall crypto market has seen strength recently, with Bitcoin back above $20k. A rising tide lifts all boats, so broader optimism benefits XLM too.
The combination of these factors helps explain the rally over the past day. XLM also saw high 24h trading volumes above $140 million, pointing to strong interest in the token.
XLM Price Levels To Watch
Now that XLM is back above $0.12, what key levels should traders watch on the charts in the days/weeks ahead?
- Resistance at $0.135: This was the peak in mid-August before XLM rolled over. Bulls will need to decisively clear this zone to open the door for further gains.
- Support at $0.12: The breakout point will now likely act as support. As long as XLM holds above $0.12, the short-term outlook remains bullish.
- 200-day moving average at $0.105: This key long-term moving average lined up with the August trading range. It will likely provide strong support if reached.
XLM needs to seeacceptance above $0.135 to confirm the bullish momentum. Otherwise, a move back into the $0.10-$0.12 range is likely. Traders should watch these levels closely.
Is This Rally Sustainable For XLM?
The big question is whether this latest surge is just a short squeeze or the start of a more sustained XLM uptrend. There are arguments on both sides:
The bullish case
- Adoption and usage continues rising
- XLM offers fast, cheap transactions
- Stellar Development Foundation is actively developing the network
- Crypto market sentiment has turned positive recently
The bearish case
- XLM remains down heavily from its all-time high
- Long-term technicals still point to a downward trend
- Macro uncertainty persists around interest rates and recession
On balance, the bullish case looks more compelling right now. XLM's real-world usage as a payments coin continues growing. And its valuation looks attractive after falling 90% from its peak. This rally could have further to run if bulls remain in control.
How High Can Stellar's Price Go In 2023?
Based on this analysis, I believe XLM has potential to reach $0.20 by early 2023 if the bullish momentum persists. Here is the case for $0.20 XLM:
- It would represent a 60% rally from the current $0.12 level. Very achievable in crypto bull markets.
- Previous XLM rallies have seen gains of this magnitude within short timeframes during bullish conditions.
- The $0.20 zone lines up with the next major long-term resistance level on the XLM price chart.
Of course, bitcoin's moves will be a key driver of whether this XLM rally can extend further. But with growing adoption tailwinds, a breakout back to $0.20 looks feasible over the coming 3-6 months if crypto sentiment improves into 2023.
Will Stellar Be A Good Long-Term Investment After This Recent Price Action?
Stellar offers significant long-term investment potential due to its strong real-world utility and active development. Here are some of the key factors to consider:
- As a fast, low-cost payments network, XLM has carved out a sustainable niche in global money transfers. Remittances and micropayments are ideal use cases.
- The Stellar Development Foundation provides funding and direction for expanding the network's capabilities and adoption.
- Stellar exhibits network effects - the more users and applications on the network, the more valuable XLM becomes as the native asset.
- XLM remains well below its all-time high despite growing utility. This suggests the asset is undervalued relative to potential.
- Dips remain buying opportunities given XLM's long-term outlook. The recent 7% surge only underscores the token's upside potential.
For patient investors with a multi-year time horizon, XLM remains a compelling way to gain exposure to the cryptocurrency payments sector. This recent bullish price action is likely just the beginning of Stellar's long-term growth story.
Is Now A Good Time To Buy Stellar Based On The Technical Analysis?
Based on this technical analysis, now appears to be a favorable entry point to buy XLM for short and long-term gains. Key reasons include:
- The breakout above $0.12 triggered a high-probability technical buy signal that typically leads to further upside.
- XLM has room to rally 20-30% back to the $0.15 - $0.20 resistance zone, representing a solid upside target.
- The 200-day moving average and $0.12 breakout point should provide strong support on any pullbacks.
- Bullish momentum has shifted in favor of the buyers, pointing to more near-term strength.
- Growing adoption and development make the long-term investment case compelling.
Traders should look to buy dips and weakness with a first price target around $0.15. The technical picture and fundamentals align for additional XLM gains in the coming months.