XLM Price Forms Bullish Engulfing Candlestick Pattern, Eyes $0.6370 Retest

The XLM price staged a strong comeback on Nov. 27, forming a bullish engulfing candlestick pattern.

Stellar (XLM) price dropped sharply last week, falling into a local bear market. However, the second-largest payment network coin staged a strong comeback on Monday, Nov. 27, forming a bullish engulfing candlestick pattern.

This rebound came as crypto markets rebounded broadly, with Bitcoin (BTC) and other major coins also bouncing back from recent sell-offs.

Fundamentally, Stellar's DeFi ecosystem performed well this week. According to DeFi Llama, Stellar's total value locked in DeFi (TVL) reached a record high of over $56 million.

Meanwhile, total assets in the Stellar ecosystem, including those in the Real World Asset (RWA) tokenization industry, are nearing $300 million. This growth is largely driven by the Franklin Templeton OnChain US Government Money Fund, which has accumulated over $400 million in assets.

Other significant decentralized applications (dApps) in the Stellar ecosystem include decentralized exchange (DEX) platforms such as LumenSwap, Aquarius Stellar, and Scoputy.

Moreover, Stellar's price increase was also supported by signs of emerging regulatory clarity in the United States.

Recently, a court ruled that the Office of Foreign Assets Control (OFAC) had overstepped its authority when sanctioning Tornado Cash, stating that autonomous software cannot be classified as property.

U.S. courts have made several favorable rulings for the crypto industry in recent months.

In 2023, a judge ruled that XRP was not a financial security, and Ripple was ordered to pay only $250 million, a fraction of the $2 billion the Securities and Exchange Commission (SEC) had sought.

These developments, combined with Trump's re-election, have sparked speculation among some in the crypto community about the potential approval of a spot XLM exchange-traded fund (ETF) in 2025.

XLM price forms a bullish engulfing

As covered in an earlier update last week, we anticipated a steep correction for the Stellar price, which came to pass. Stellar's price dropped to a low of $0.4168 on Monday, Nov. 26, marking a 35% decline from its highest level this year.

It has since formed a bullish engulfing candlestick pattern, a strong reversal indicator. This pattern is characterized by a large bullish candlestick that fully covers a preceding bearish one.

If Stellar Lumens price closes above $0.50, this would validate the engulfing pattern and indicate further gains. Under this scenario, the price could retest its year-to-date high of $0.6370, which it reached earlier this month.

On the other hand, there is a risk that this rebound could be a dead cat bounce, a temporary recovery during a sell-off. This bearish view would gain traction if the price falls below $0.4168.