Stellar (XLM) has recently been in a phase of consolidation, forming a bullish flag pattern on its daily chart. Despite the overall bearish sentiment in the cryptocurrency market, XLM’s technical setup and on-chain metrics suggest that a breakout could be on the horizon. Currently trading at $0.3410, XLM is facing resistance at the $0.35-$0.40 range while finding support at $0.28-$0.30. These technical levels are critical in determining whether the cryptocurrency will continue its bullish momentum or remain trapped in a consolidation phase.

XLM has faced challenges breaking above the $0.40 resistance, a level that has consistently held back price action. However, the cryptocurrency’s ongoing price consolidation could be a precursor to a potential breakout. If buying pressure increases, as suggested by analysts like Solberg Invest, XLM could surpass the $0.40 resistance and target its previous resistance at $0.51. This would mark a significant price move, potentially signaling the continuation of XLM’s upward momentum.

Despite price volatility, XLM’s on-chain data tells a more optimistic story. The cryptocurrency has experienced steady growth in network accounts and Total Value Locked (TVL) since late 2024, indicating a growing use of the Stellar network. This suggests that while the price has been fluctuating, the fundamental growth of the network is healthy. The growing number of long-term holders (HODLers) reflects confidence in XLM’s long-term potential, even as short-term price action remains uncertain.

One of the key metrics that show investor confidence is the Long-Short Ratio, which stands at 2.31. This ratio, which compares the number of long positions to short positions, shows that more investors are betting on the price of XLM to rise rather than fall. In fact, this ratio has grown to 2.41 on a 4-hour timeframe, indicating that there is increasing buying pressure among traders. The fact that investors are more inclined to take long positions suggests that many believe in the potential for XLM to break higher in the near future.

Additionally, the Exponential Moving Average (EMA) 200, which tracks long-term price trends, is currently positioned below the price at around $0.2428. This is another positive indicator, as it suggests that XLM is still in a relatively strong position for long-term growth, despite short-term price fluctuations. If XLM can hold above this level, it could continue its upward trajectory, provided that it breaks through key resistance levels.

At present, the Relative Strength Index (RSI) for XLM sits at 44.93, which is somewhat neutral. However, the 4-hour RSI has risen to 53.15, indicating potential accumulation and a shift toward buying activity. If the RSI continues to rise and remains in a bullish trend, it could signal that the market sentiment is turning in XLM’s favor.

Despite the overall market’s bearish outlook, XLM’s ability to consolidate at these levels while seeing growth in its network activity and investor sentiment suggests that the cryptocurrency is well-positioned for a potential breakout. A key factor to watch in the coming days is whether XLM can break above the $0.40 resistance with strong volume and sustained buying pressure. If this occurs, the cryptocurrency could target $0.51 as its next major price level.

However, if the breakout does not materialize, XLM may continue to consolidate within the $0.28-$0.35 range. Traders and investors should keep an eye on the trading volume, RSI, and Long-Short Ratio to gauge market sentiment and assess the likelihood of a breakout in the near future. As always with cryptocurrency, volatility remains a key factor, but XLM’s underlying fundamentals suggest that it could see further upside if the technical indicators align in its favor.