Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Stellar Lumens had neutral momentum in the market over the past two days, and only in the last few hours did the coin see a shift in momentum in favor of the bulls. This shift in sentiment indicated a move to the upside for XLM.
EOS 1-hour chart
Source: XLM/USD on TradingView
Since the first week of January, XLM has been trading within a range from $0.233 to $0.313. On the hourly chart, levels associated with this range have become important due to the timeframe of the price action.
The 50% level of the range, $0.271, is the most important level within the range – a rejection at, or an ascent above, is a good indication of market sentiment. Stellar Lumens showed some strength as it rose above the mid-point of the range it was trading in.
Reasoning
The RSI, which had been choppy about the neutral 50 value, rose above it to denote short-term bullish momentum. The MACD formed a bullish crossover as well and climbed above the zero line.
The Bollinger bands’ width indicator reached a low on the 24th and has increased ever since to show that volatility was slowly rising.
The trading volume also saw a slight uptick as the price rose above the mid-point. Taken together, the indicators all showed that a move upward was likely for XLM. Generally, bulls claiming the mid-point will result in bulls driving the price upward to test the range highs.
A retest of the same level would offer an ideal entry to a long position while slipping beneath this level would invalidate bullish strength.
Important Levels
Entry: $0.271
Exit: $0.31
Stop-loss: $0.26
Risk-to-reward: 3.55
Conclusion
A retest would be an ideal long position entry. The $0.29 level could offer some resistance to XLM and would be a place to take some profits at. Losing the mid-point of the range will not only invalidate this notion but also indicate that a move to the range lows was on the table.
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