After breaking out of its five-month downtrend, recent analysis suggests that Stellar (XLM) may be poised to repeat its past cycle playbook. The cryptocurrency has exited a bullish reversal pattern and is now eyeing potential surges toward new targets.
Stellar Breakout Targets $0.39
In the wake of a recent market pump, Stellar has successfully broken out of a critical demand zone, making its first significant retest of the $0.30 mark since March. Following a prolonged downtrend that began after its November 2024 breakout—when XLM reached a three-year high of $0.63—the cryptocurrency faced a considerable drop, plunging 68% to a low of $0.20.
However, the late-April market rally has led XLM beyond its downtrend, with signs supporting a confirmed breakout after a weekly close above the $0.28 threshold. Recently, Stellar reclaimed the $0.29 resistance level, retesting the $0.30 mark for the first time in nearly two months. This breakout aligns with the inverse head and shoulder pattern identified by analyst Ali Martinez.
This inverse head and shoulder pattern is a bullish reversal setup signaling a potential change from downtrend to uptrend. Notably, the formation’s right shoulder was identified earlier in the week, with the neckline positioned around the $0.29 range. According to the analysis, success in breaking from this pattern could translate into a 30% rally targeting the $0.39 resistance lost during previous February retraces.
XLM To Repeat Historical Tendencies?
Analyst Rekt Capital has noted that Stellar appears to have confirmed the end of its extended downtrend, breaking free from its downtrending channel. If XLM manages to achieve a weekly close above the key zone between $0.27 and $0.29, any subsequent dips into this area may establish it as support, paving the way for upward movement.
This particular range is crucial, as it has historically served as a demand region on the monthly timeframe. By establishing this zone as support in past bull trends, Stellar has achieved significant price surges towards the $0.37 to $0.40 mark. In 2021, the cryptocurrency soared to its cycle high of $0.80 after retesting the core demand zone and successfully breaking past the $0.37 resistance. Similarly, XLM reached its all-time high of $0.87 following an upward breakout from this area.
For XLM to replicate these historical trends and reach critical resistance levels, it must reclaim and confirm these price zones. Achieving this could set the stage for XLM to challenge the $0.52 highs in the future, as concluded by Rekt Capital.
Moreover, analyst CW has noted that, having broken the upper line of the downtrend channel, Stellar may face resistance within two key selling walls—one located between $0.34 and $0.38, and a larger one spanning the $0.47 to $0.70 region.
As it stands, Stellar is trading at approximately $0.296, reflecting a 2% increase on the daily timeframe.
