Stellar (XLM) returned to an important support zone: Will the $0.44 mark trigger a new rally?

Stellar (XLM) has recently maintained a strong rise to the sky, but it may be time for the market to undergo a slight correction.

According to analysts, the rise of more than 110% in just one week may have exhausted the XLM bulls. Notably, the recent drop of XLM coincided with a 4.95% correction of Bitcoin (BTC), from $123,200 to $117,100.

Source: CoinalyzeData from Coinalyze shows that short-term optimism remains quite strong, as the Funding rate continues to maintain a positive level. However, the 10.6% price drop has led to a decrease of 20 million USD in Open Interest (OI) – reflecting the liquidation of Long positions and profit-taking at the resistance level of $0.51.

The spot CVD indicator continues to maintain an upward trend, indicating that selling pressure has not taken the lead. This suggests that this correction may not be too deep.

Can the bulls maintain the upward momentum of XLM?

XLM/USDT Chart | Source: TradingViewBased on the rise since June 22, a set of Fibonacci retracement levels has been illustrated by the white line. The market structure has shifted to a clear upward trend since July 6, accompanied by high trading volume as the price quickly climbed to $0.516.

During the rise, the daily chart showed some "fair value gaps" (fair value gap). The first area is around $0.42–$0.44 and is currently being retested at the time of writing.

The A/D indicator continues to maintain a rising trend, indicating strong buying volume in recent days. The CMF indicator also reinforces a similar trend with a level of +0.23 - far exceeding the threshold of +0.05, confirming that a large amount of capital is flowing into the market.

However, the MFI indicator has begun to withdraw from the overbought area (97,7) established on July 14.

XLM/USDT chart on the 4-hour timeframe | Source: TradingViewAlthough the 1-day timeframe has issued a strong signal, the 4-hour chart shows a bearish divergence. Specifically, the MFI indicator and the price action (marked in orange) indicate a clear signal of correction.

This adjustment has pulled the price of XLM down to $0.43. At the same time, the CMF indicator has also fallen into the neutral zone. Overall, the bearish divergence has been "resolved" through XLM returning to the "fair value gap" - which currently acts as an important support zone.

If BTC adjusts deeper and loses the threshold of $116,000, XLM may continue to decline. However, until that happens, buyers can still maintain positive expectations for Stellar.

Justin