Is the price of XLM about to breakout? The Order Book is tightening.

The price of Stellar (XLM) has had a series of strong daily closes, reflecting significant buying pressure and increasing investor confidence.

From a technical perspective, market momentum has completely shifted towards the buyers; however, the price of XLM is approaching a region that could pose resistance, where technical resistance and momentum in the order book are slowing down the current upward trend.

The most recent daily candles indicate a strong upward movement, exceeding both the 9-day and 20-day exponential moving averages (EMA). This price action pattern – where the short-term EMA sharply rises compared to the long-term EMA – often signals a strong bullish trend is forming. The current position between the EMA lines confirms that the bulls are in control of the market and the trend is accelerating.

The MACD indicator has also shifted from a weak bullish crossover to a distinct upward trend, with gradually expanding histogram bars, reflecting that the bullish momentum of XLM is not only strong but also sustained over many trading sessions.

At the same time, the Relative Strength Index (RSI) has moved deep into the overbought zone, surpassing the 70 threshold. This strength level indicates that investor confidence in the upward trend is very high, but it also warns of the risk that XLM is being stretched too thin and may need a short-term adjustment.

Daily XLM price chart | Source: TradingView## XLM resistance zones: Is the price about to hit a "ceiling"?

The price of XLM is approaching a key resistance area at $0.402 – which was a strong ceiling in previous bullish runs. If it breaks through this level, the price could surge to the next resistance levels at $0.428 and $0.45.

However, before achieving that, XLM needs to overcome the dense "ask walls" in the order book — especially at $0.394 and $0.377. These are areas with a large amount of sell orders, and if liquidity cannot be absorbed here, the price may stagnate or temporarily adjust.

Notably, if XLM breaks through the ask wall at $0.394, the price could increase by about 5% to $0.402, and if the momentum continues, it could potentially rise another 15% to the range of $0.433.

Support levels: The "price floors" to watch

On the contrary, if a correction occurs, XLM currently has some important support zones. The nearest support level is around $0.356, just above the current price range. If this level is broken, the price could drop further to $0.331 and $0.323.

However, the real risk lies in the order book. Currently, there are three large "bid walls" creating support buffer zones for the price of XLM at the levels of: $0.34, $0.33, and $0.299. Notably, these walls indicate very strong demand, especially at the $0.33 level where over 1.5 million XLM are waiting to be bought. If the bid walls hold strong, the price could bounce back from here.

However, if the bid wall at $0.33 is breached, the market could see a strong correction of up to 12%, and if it continues to lose the $0.299 mark, the risk of a deeper drop of 20% will emerge.

XLM Trading Strategy: Prioritize Long Orders but Exercise Caution

Strategically, the current technical signals support a Long trend. The moving averages and MACD indicator show momentum leaning towards the bulls, while the order book also notes strong accumulation zones below. However, the RSI is in the overbought territory, indicating that any subsequent price increase may be accompanied by short-term volatility.

For the Long strategy, the potential entry point occurs when the price breaks out above the ask wall at $0.394, along with confirmation from trading volume. The price targets include $0.402 in the short term and $0.428, $0.45 if the upward momentum continues. The stop-loss order should be placed below the support area of $0.356 or below the support wall at $0.34 to manage risk.

For the Short strategy, counter-trend traders can watch for rejection signals around the 0.394 or 0.402 dollar levels, especially if the RSI continues to be overbought and trading volume weakens. However, it is important to note that Shorting against a strong upward trend like the current one carries high risks, so it is essential to manage risk tightly and have additional confirmation signals, such as bearish RSI divergence or a MACD crossover downward.

Conclusion

The current technical picture of XLM is clearly leaning towards a bullish trend, with price action supported by strong trend indicators and dense support areas in the order book. However, the price entering key resistance zones simultaneously with overbought signals also means that traders need to be selective and maintain discipline.

If a successful breakout occurs, the market could open up a new strong bullish trend. Conversely, if the price is rejected at the resistance level, short-term traders may take the opportunity to trade in the direction of the correction.

Dinh Dinh