XLM price penetrates trendline in possible bear trap, but Stellar will recover

Stellar price is testing the green ascending trend line that acted as backbone for the uptrend since the beginning of October.
XLM price looks to be making a false breakout, a bear trap, that could see large buy-side volume resulting in a bullish recovery and breakout.
Expect a quick break above $0.41 towards $0.46.

Since the beginning of October, the Stellar (XLM) price has been in an uptrend, with a well-defined green ascending trend line acting as the backbone. This trend line is being broken today, in what looks like a bear trap. This should result in bulls quickly using the opportunity to overhaul bears and make a breakout trade up to $0.46. As bulls finally have broken out of the bandwidth since mid-June, expect more upside potential to follow.

XLM price to recover as uptick in volume washes out any bearishness

A break to the downside looks to be unfolding, but with global market sentiment still in check and favorable tailwinds still present, this instead looks like a bear trap ready to offer bulls an entry for a recovery move followed by a future break out from the consolidation.

XLM price should see volume on the buy-side pick up throughout the day and wash out any bearishness that could put the uptrend under pressure. Expect a massive uptick in buy-volume and then a breakout to unfold towards $0.46. XLM price will likely be rejected at first but will find support at $0.41, where new buyers will come in and push XLM price up for another leg towards $0.51.

XLM/USD daily chart

The bull-trap thesis would only be invalidated if bears can push price action below the $0.35 low of October 21, in which case expect a pickup in selling volume with a nosedive in XLM price action as a result. Although bears face the 55-day Simple Moving Average (SMA) and the monthly pivot around $0.33, expect selling to continue until $0.30. With the double barrier at $0.30 and $0.29, however, bears will face quite some resistance from bulls that will want to keep the uptrend in place.

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