XLM price building base for bullish breakout

Stellar (XLM) is still respecting the bullish triangle where lower highs are playing out, and on the topside, the price is getting squashed up against $0.40 resistance level each time it meets it. With momentum building, a quick pop through the top could happen with XLM price moving quickly towards $0.46. Although some profit-taking could slow momentum early on, expect the rally to have legs, and probably head towards $0.51.

XLM price rally holds more potential

XLM price has been respecting the bullish triangle that formed in October for quite a few weeks now – excepting one false breakout. Bulls flocked in massively on October 15, at the level of the 55-day Simple Moving Average (SMA) where it crossed the green ascending trend line. 

The shelf of resistance at $0.40 has kept price action muted for quite some time now. A few false breakouts were each time quickly reversed by bears defending this level since June 05. But with higher lows and XLM price being squeezed against $0.40, an outbreak looks imminent.

XLM/USD daily chart

XLM price may see more bulls flocking in for a quick pop higher above $0.40. Expect some quick profit-taking at $0.46. From there, XLM price will probably correct back to $0.40 where it will test that level for support.

XLM price will probably then bounce off $0.40 under new entries of fresh buying volume, that will see the price ramp up towards $0.51. At that level the rally will probably stall, as $0.51 falls in line with the monthly R2 resistance level and historical high from May 24. At that point, XLM will probably make a pattern like the previous outbreak and will fade back to $0.46 for a support test before reattempting to break $0.51.

Should bulls fail to break $0.40, expect bears to push price-action back down, or let bulls enter into a bull trap before bears run price back down. A green ascending trend line break will push XLM price back to $0.30 and $0.25.