XLM price shed nearly 15% between December 9 and 10 amid a market-wide selloff. This move created a range, extending from $0.118 and $0.138. Since then, XLM price has been trading inside this range, where buyers and sellers are currently locked in a tug-of-war. But that outlook is likely to change soon with the recent sweep of the range low and recovery above it.

XLM Price Eyes Quick Mean Reversion Rally

XLM price swept the range low of $0.118 and and created a higher high above above the last lower high of $0.120. This development is called a bullish market structure shift, where the underlying asset’s price produces a higher high in a downtrend, signaling a potential reversal of the trend.

Additionally, XLM price recovery was followed by a bounce of the demand zone, extending from $0.116 to $0.119, which is likely to add more bullish momentum, confirming a potential mean reversion rally.

If XLM price can maintain its position above this demand zone, a recovery bounce could offset recent losses. The key targets of this move include the 50% Fibonacci retracement levelat $0.128, which is nearly 6% away from the current price of $0.121. Other targets include the 62% and 70.5% retracement levels at $0.130 and $0.134, respectively.

In a highly bullish case, XLM price could even challenge the range high of $0.138. However, it’s important to remember that cryptocurrency prices are notoriously volatile, and achieving these targets is not guaranteed.

Invalidation Scenario:

On the other hand, if XLM price breaches the range low by producing a one-hour candlestick close below the range low at $0.118, it would create a bearish market structure shift and invalidate the bullish thesis. Such a development could see XLM price revisit the $0.116 level, which is the lower limit of the demand zone.