Stellar's (XLM) Bullish Pattern Hints at Breakout After 65% Price Fall

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The Stellar (XLM) price has been navigating a critical phase in its long-term recovery, currently trading within a descending wedge pattern after enduring a steep correction of over 65% from its cycle high. Despite the significant drop, market structure and technical indicators suggest a potential reversal could be on the horizon. With growing institutional interest and positive developments in the ecosystem, many investors are asking: Is XLM preparing for a breakout?

This article explores the current technical setup, analyzes key support and resistance levels, evaluates momentum signals, and assesses the likelihood of a sustained upward move in the coming weeks.

XLM’s Bullish Descending Wedge Pattern

Since reaching its peak at $0.636 on November 24, 2024, Stellar (XLM) has been in a corrective phase, gradually declining within a well-defined descending wedge formation. This pattern is widely recognized in technical analysis as a bullish reversal signal, especially when it follows a strong prior rally — which XLM certainly experienced in late 2024.

A descending wedge forms when price highs and lows converge downward, but with decreasing volatility and narrowing range. The contracting nature of this pattern often indicates weakening selling pressure, setting the stage for an upside breakout.

On April 7, XLM demonstrated a strong reaction at the lower boundary of the wedge, forming a bullish candlestick that confirmed support. This bounce coincided with two additional technical confluences:

These overlapping support layers increase the probability that this dip is part of a healthy correction rather than the start of a deeper bearish trend.

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With the wedge nearing its apex, traders anticipate a decisive breakout in the near term. Historically, descending wedges resolve upward approximately 70–75% of the time, particularly when accompanied by rising volume and positive market sentiment.

Technical Indicators: Mixed Signals on Momentum

While the price structure leans bullish, technical indicators present a more nuanced picture.

The Moving Average Convergence Divergence (MACD) shows promising signs. A bullish divergence has formed on the daily chart — highlighted in orange — where prices made lower lows while the MACD histogram created higher lows. This divergence suggests that downward momentum is waning and buyer interest may be building.

Moreover, the MACD line has recently crossed above the signal line, indicating short-term bullish momentum could be gaining traction.

However, the Relative Strength Index (RSI) remains below 50, currently hovering around 44, which reflects ongoing bearish momentum on the daily timeframe. An RSI above 50 is typically required to confirm a shift into bullish territory.

This divergence between price action and oscillator signals implies that while structural conditions favor a breakout, confirmation is still pending. Traders should watch for a sustained RSI move above 50 combined with increasing trading volume to validate a true trend reversal.

Elliott Wave Analysis: Is XLM Completing Its Correction?

Elliott Wave Theory offers another lens through which to interpret XLM’s current trajectory.

According to wave analysis, XLM completed a full five-wave bearish impulse (labeled in red) that began in November 2024. In Elliott Wave principles, five-wave structures typically mark the end of a trend phase — in this case, the conclusion of the downward correction.

If this interpretation holds, what follows should be a multi-wave corrective rally — commonly structured as an A-B-C upward pattern (shown in green).

Based on this projection:

Additionally, using the Fibonacci time zone tool, the upward phase could persist through June 2025, aligning with expected catalysts such as increased adoption and network upgrades.

This wave structure supports the idea that even if XLM remains in a broader corrective phase, a powerful countertrend rally is likely underway.

Upcoming Catalysts: Stellar’s Growing Institutional Presence

Technical setups gain strength when supported by fundamental catalysts — and XLM has recently seen positive momentum on that front.

Stellar Development Foundation announced it will be the main sponsor of Paris Blockchain Week 2025, one of Europe’s most influential blockchain conferences. This high-profile involvement signals growing confidence in the Stellar network’s role in cross-border payments and financial inclusion.

Such visibility often attracts institutional partnerships, developer engagement, and media coverage — all of which can drive demand for XLM tokens used within the ecosystem for transactions and smart contract operations.

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Given Stellar’s focus on real-world use cases — including remittances, CBDC integrations, and stablecoin infrastructure — renewed attention could accelerate adoption and support price appreciation post-breakout.

What Happens After a Breakout?

Should XLM successfully break out of its descending wedge with strong volume, the next targets would likely be:

Conversely, failure to break out could result in a retest of the $0.21 support. A breakdown below this level would invalidate the bullish thesis and suggest further downside toward $0.18–$0.15.

Traders are advised to monitor:

Frequently Asked Questions (FAQ)

Q: What is a descending wedge pattern?
A: A descending wedge is a chart pattern characterized by lower highs and lower lows that converge downward. It typically signals a pause in a downtrend and often precedes a bullish breakout, especially after a strong prior rally.

Q: How much did XLM fall from its peak?
A: XLM dropped over 65% from its cycle high of $0.636 reached in November 2024, finding support near $0.21 in early 2025.

Q: What are the key resistance levels for XLM?
A: The primary resistance levels to watch are $0.37**, **$0.42, and **$0.47**. A break above $0.42 could open the door to stronger buying pressure.

Q: Is Stellar (XLM) used for anything beyond speculation?
A: Yes. Stellar focuses on real-world applications like low-cost cross-border payments, central bank digital currency (CBDC) infrastructure, and tokenized asset issuance — making it one of the more utility-driven blockchain platforms.

Q: When might XLM break out?
A: With the wedge pattern nearing completion, a breakout could occur anytime between April and June 2025, especially if supported by rising volume and positive news flow.

Q: Can technical analysis predict XLM’s future price accurately?
A: While no method guarantees accuracy, combining chart patterns like the descending wedge with Fibonacci tools, wave counts, and volume analysis improves forecasting reliability — especially when aligned with fundamental developments.

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Core Keywords:

The current market structure for Stellar (XLM) presents one of the most compelling technical setups of 2025. With a clear descending wedge forming, strong support holding, and growing fundamental momentum, the stage may be set for a significant move higher — provided buyers step in decisively in the coming weeks.

While caution is warranted until confirmation via volume-supported breakout and RSI alignment, the risk-reward profile appears increasingly favorable for long-term investors watching this resilient network.