Stellar (XLM) is entering the month of August on a strong technical footing, following weeks of momentum driven by both major adoption news and emerging bullish indicators.
As the token trades at around $0.40, analysts and traders are closely watching a textbook bullish pennant formation, a pattern often associated with price continuation after a rally.
And with market sentiment gradually turning positive, XLM could be on the verge of a significant breakout.
Bullish pennant signals a possible rally ahead
The price of XLM has been consolidating between converging trendlines, forming a bullish pennant — a structure that typically emerges after a steep upward move.
This consolidation suggests that the asset is gearing up for its next leg higher.
Currently, Stellar (XLM) is holding steady at $0.40, trading within a narrow range that reflects market indecision but also growing pressure for a directional move.
If the token breaks above the upper trendline of the pennant, a strong rally could follow. The first target is the July 18 high of $0.52.
Should bullish momentum continue, the price could then attempt to reach the November 2023 high of $0.63.
The fact that this setup is forming after recent positive developments adds more weight to the bullish outlook.
Visa integration lends strong fundamental support
One of the most notable developments supporting XLM is its recent integration into Visa’s blockchain settlement network.
Visa, a global payments giant, has added Stellar to its platform alongside Ethereum, Solana, and Avalanche.
This move allows stablecoin payments to be settled directly on Stellar’s blockchain, aligning perfectly with the project’s long-term goals of improving cross-border payment efficiency.
This partnership could prove to be a major driver of adoption for Stellar.
It also places the project in direct competition with XRP, a fellow cross-border payment solution that continues to face legal uncertainty in the United States.
By contrast, Stellar now enjoys the backing of one of the most influential financial entities in the world, potentially giving it a competitive edge in institutional finance.
Smart money is moving in as retail traders stay calm
While many retail traders remain on the sidelines, on-chain data shows that institutional interest in XLM is increasing.
Metrics suggest that smart money is quietly accumulating the token during this consolidation phase.
Historically, low retail activity has preceded some of Stellar’s most significant rallies, as institutions take advantage of calmer market conditions to build positions.
The derivatives market also reflects growing optimism. The long/short ratio for Stellar (XLM), according to Coinglass, recently hit 1.14, its highest in over a month, signalling that more traders are betting on upside.
Additionally, the funding rate is positive at 0.0085%, indicating that long positions are dominant and confident.
Technical indicators back the bullish Stellar (XLM) outlook
Aside from the bullish pennant, the Relative Strength Index (RSI) on the daily chart has dropped to around 52, coming from an overbought region, providing room for a substantial comeback.
XLM also has clear support levels that may serve as strong accumulation zones.
The area between $0.40 and $0.36 has seen consistent interest, with the 50-day Exponential Moving Average (EMA) at $0.35 acting as a crucial stop-loss marker for traders.
If the Stellar (XLM) price breaks below this level, the bullish structure would be invalidated, potentially leading to a deeper correction.
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