Over the past week, Stellar Lumens has risen between the $0.291 area and the $0.25 area. This is not a perfect range, but in context one makes more sense. At the time of writing, the price is once again at a liquidity of $0.26. A close below $0.255 is likely to see Stellar Lumens return to the $0.245 area.
Source: XLM/USDT on TradingView
It has been shown that the price is not in a perfect range. In fact, on the 4-hour chart, the price action over the past two weeks has resembled a descending expanding wedge. Prior to that, for most of December, XLM was trading at $0.25, forming a round bottom it has revisited over the past week.
An expanding wedge pattern signals a continuation or reversal, based on context, in a trending market. The recent XLM is not trending, but rather, is trending differently.
Therefore, the $0.24-$0.25 area could be a buying opportunity, with $0.279 and $0.291 as profit targets.
Theoretical basis
Source: XLM/USDT on TradingView
The DMI shows no strong trend going on as the ADX (yellow) is below 20. The RSI is moving below the neutral level of 50, showing that bearish momentum is present. The RSI has made higher lows in recent hours, even as price made lower lows. This could see XLM bounce from the $0.26 area and possibly retest the $0.279 resistance.
The Chaikin cash flow shows capital inflows are strongly directed away from the market, a sign of strong selling pressure.
Inference
The $0.24-$0.25 area is a good area to buy some XLM, however, the risk must be managed carefully as XLM has not warded off a drop to as low as $0.235. At the same time, the presence of a bullish divergence in an area with a lot of liquidity in recent days could also indicate a recovery, but the risk-reward of such a move may not. reasonable for those who do not like risk traders.