Stellar’s native cryptocurrency, XLM, is generating excitement among traders as it shows signs of a potential breakout. Analysts suggest the token could surge by 25% if it manages to stay above a key support level. With a mix of technical signals and on-chain data pointing to bullish momentum, the question is whether the rally can materialize or if the bears will regain control.

Analyst Signals a Bullish Setup for XLM

On December 23, a well-known crypto analyst shared insights on social media platform X (formerly Twitter) about a bullish signal for XLM. The expert pointed out that the TD Sequential indicator, a popular tool for spotting potential trend reversals, has issued a buy signal for the token.

According to the analyst, XLM’s price trajectory hinges on its ability to hold the $0.35 support level. If this level remains intact, the token could rally to $0.45. However, if XLM slips below $0.33, it may face a steep decline, with prices potentially dropping to $0.22.

XLM’s Current Price Action: Consolidation in Focus

Recent trading activity shows that XLM is consolidating in a tight range between $0.34 and $0.39. This range lies near a critical support level at $0.347, which has been tested over the past four trading days.

• Upside Potential: Holding above $0.35 could pave the way for a 25% rally to $0.45.
• Downside Risk: Failing to maintain this level may lead to a 33% drop, pushing prices as low as $0.22.

The token’s daily chart reveals that XLM remains in an overall uptrend, despite its price being far from the 200-day Exponential Moving Average (EMA). This distance indicates some overextension, but the trend still leans bullish for now.

Bullish On-Chain Metrics Support Positive Outlook

The technical signals are further bolstered by promising on-chain data. Analytics from Coinglass show a significant outflow of $6.5 million worth of XLM from exchanges, suggesting that investors are buying and moving their holdings off trading platforms. This behavior often indicates increased confidence in future price appreciation.

Moreover, the long/short ratio for XLM on Binance reflects a clear bullish sentiment. Approximately 65.4% of top traders are holding long positions, while only 34.6% are shorting the token. A ratio above 1 typically points to strong market optimism.

Challenges Amid Reduced Trading Activity

Despite the positive signals, XLM is not immune to market challenges. Over the past 24 hours, the token has experienced a 3% decline, with its price hovering around $0.358. Additionally, trading volume has dropped by 19%, indicating reduced activity among both traders and investors.

This dip in participation could reflect broader market uncertainty, but it also highlights the importance of maintaining the $0.35 support level. If bulls manage to hold this line, XLM could attract renewed interest and regain momentum.

What Lies Ahead for XLM?

The outlook for Stellar’s XLM depends largely on whether it can hold its ground above $0.35. If the token succeeds, a rally to $0.45 becomes a strong possibility, offering traders a 25% upside.

However, failure to maintain this support could lead to a sharp correction, with prices potentially dropping to $0.22. For now, the combination of bullish technical indicators and strong on-chain metrics suggests that the bulls have the upper hand.

As the crypto market evolves, traders and investors will need to keep a close eye on XLM’s price action and key levels. Whether this rally materializes or not, Stellar’s native token remains a focal point in the market’s ongoing developments.