We have been bullish on Stellar because of the positive divergence on the RSI. Yesterday, price confirmed our positive view as it broke out of the 20-day EMA.
The XLM/USD pair is currently trading at the resistance line of the descending channel. If it breaks out of the channel, we expect the trend to change from bearish to bullish.
Traders can enter long positions on a breakout and close (UTC time frame) above the resistance line of the channel. The initial stop loss can be kept at $0.18 on a closing basis (UTC time frame).
The target objectives on the upside are a move to $0.36 and $0.47. The risk to reward ratio is not attractive, hence, traders should book partial profits at $0.36 and trail stops higher to reduce their risk.
If the overall market turn bearish, we shall close the position well before the stops are hit. Our bullish view will be invalidated if prices remain inside the channel.