Stellar (XLM) has recently demonstrated some early signs of a potential trend reversal, after forming a higher low on its charts. This could suggest that buyers are gradually regaining control, as selling pressure starts to ease. However, despite these early signs of bullish movement, the volume profile has been on a decline, which raises questions about whether the recovery is strong enough to support a significant reversal. Traders and analysts are urging caution as they await more confirmation of a lasting upward momentum.

XLM has recently bounced back from a local low of $0.315, trading around $0.341 at the time of writing. The fact that the asset has been able to make a higher low compared to its previous lows near the $0.300 mark is a positive indicator. This higher low is often seen as a sign of resilience in the market, where buyers are starting to overpower sellers. It also suggests that the bears are losing strength, and that a reversal in price action could be on the horizon.

However, for a confirmed trend reversal, Stellar needs to recover key resistance levels. Specifically, the asset must reclaim the $0.365 to $0.380 range, which aligns with the 50-day Exponential Moving Average (EMA). The 50 EMA is a crucial technical level that often serves as a marker for short-term price trends. If XLM can manage to breach this zone, it would provide more confidence that the asset is indeed heading for an uptrend.

Yet, the lack of significant volume during this upward movement is a key factor to consider. While the price action has been positive, the volume has been decreasing, which suggests that the rally may not have sufficient momentum to continue at a strong pace. Lower volume can sometimes signal weak buying interest, and without a surge in demand, the price gains could be limited or short-lived.

In the event that XLM does break above the $0.365-$0.380 range, it would likely face resistance around the $0.398 level, which could open the door for a move toward the $0.420 range and potentially higher. A breakout past these levels would mark the beginning of a solid bullish trend and could lead to more gains for XLM in the coming weeks.

However, if the volume continues to decline and fails to pick up, any upward price movement could encounter significant resistance, making it harder for XLM to maintain higher levels. This could lead to a potential pullback if the asset cannot hold the $0.341 support level. In a bearish scenario, a sell-off could push the price back to the $0.315 range or even test the key support zone at $0.300, which would invalidate the potential reversal.

To confirm whether a bullish breakout is in progress, traders should closely monitor the volume as the primary indicator. An increase in buying volume would support the idea of a sustainable uptrend, while further declines could signal that the reversal may not be as strong as initially expected. The trend reversal could be confirmed if XLM continues to hold above $0.341 and breaks through critical resistance levels. However, if these conditions are not met, the asset may return to lower price levels.

In conclusion, while Stellar (XLM) is showing early signs of a reversal, the ongoing decline in volume means that caution is required. The next few trading sessions will be crucial for determining whether the asset can maintain upward momentum or whether it will face further challenges ahead. Traders should keep a close eye on the volume and key resistance levels to assess the strength of the potential rally.