Key Takeaways
- XLM broke out of a falling wedge — typically a bullish pattern — but the CMF signals weak buying pressure.
- Despite the price recovery, on-chain data shows that social perception has not yet favored XLM.
- The next major resistance is $0.30; Without stronger volume or sentiment, XLM may struggle to sustain momentum.
Like many other altcoins, Stellar (XLM) price has experienced an underwhelming year-to-date (YTD) performance. Within this period, XLM’s price has fallen nearly 40%, with most of these losses coming from the last quarter.
However, the last 24 hours have seen a change in that trend with XLM rising to $0.26. Despite the rebound, this analysis reveals that the altcoin might find it challenging to keep rising.
XLM Buyers Lack Full Control
XLM’s price has previously fallen from a yearly peak of $0.50 to $0.22. This correction led to the formation of a falling wedge on the daily chart.
A falling wedge occurs when the price falls but loses momentum, creating a squeezed look between two downward trendlines. Over time, the range between the trendline and the price breaks out upward.
You’ll Want To See This
The chart below shows that XLM’s price has broken out of the falling wedge and is showing signs of an extended rally. However, according to the daily chart, XLM’s price might struggle to build on its 7% increase.
One reason for this is the Chaikin Money Flow (CMF) position. The CMF is a volume-weighted indicator that measures buying and selling pressure over a specific period.
Buyers are in control when the CMF is consistently above zero and rising, and the uptrend strengthens. However, in this case, XLM’s price is climbing, but the CMF is below zero.
Sentiment Bearish
This indicates that the bullish move might be losing steam and forming a bearish divergence. If this continues, XLM might fail to breach the $0.30 overhead resistance and risk falling back to the $0.22 underlying support.
The on-chain perspective also supports this outlook. According to data from Santiment, the Weighted Sentiment around the altcoin has remained in the negative zone despite the bullish price action.
Weighted Sentiment tracks the average remarks the market has about a cryptocurrency online. When the reading is positive, most comments are bullish and could trigger higher demand.
The current reading for Stellar indicates bearish sentiment. Should this remain the case, XLM’s price could find it challenging to rally above $0.30, as initially stated.
XLM Price Analysis: Pullback Imminent
Looking ahead, the Average Directional Index (ADX) confirms that XLM could face resistance. The ADX measures directional strength.
When it rises above a reading of 25, directional strength is strong, and the price can increase. However, on the daily chart, the ADX has turned downward, indicating that XLM’s uptrend is weak.
Should the reading continue to drop, then XLM’s price might decline to $0.22. On the other hand, a rise in the ADX reading could change the trend.
This could also happen if the CMF rises above zero, confirming buying pressure. If validated, XLM’s next move could be a rise to $0.30.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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