Stellar (XLM) experienced a significant drop of 8% after a remarkable 173% surge, landing at the top of the losers’ list on CoinMarketCap. This pullback could potentially serve as a healthy retracement before another upward movement, but do the current indicators support such a scenario?
Future Prospects for XLM
Analyzing the weekly chart, XLM managed to hold its ground at a crucial support level of $0.4, boosting the likelihood of the altcoin targeting its previous highs of $0.79 or even surpassing them.
The uptrend is further reinforced by the increase in the Chaikin Money Flow (CMF), indicating significant capital inflows and potentially paving the way for further momentum above $0.4.
On the other hand, indicators on the 12-hour chart suggest that the continuation of the uptrend might face some delay. The stagnation of the CMF since November 20 indicates a pause in the inflows, potentially dampening the chances of a prolonged rally.
The declining trading volume is another concerning factor that might lead XLM to retest the support level and liquidity beneath $0.4.
For now, XLM could trade within the range of $0.40 to $0.62 before any breakout occurs, whether it leans towards the upside or downside.
Whales Shift Positions
The repositioning of whales in the XLM market aligns with the projected price range. Following profit-taking activities in the previous week, whales have started exiting long positions, as evidenced by the negative turn in the Whale vs. Retail Delta.
Historically, the de-risking behavior of major players often triggers price consolidation or retracements.
Furthermore, the Average Directional Index (ADX), utilized to measure a token’s price trend potency, plummeted from nearly 80 to 21.
If the ADX drops below 20, it would indicate a weakened trend, posing a risk for any trading activities, particularly for swing traders.
In essence, although the continuation of XLM’s uptrend seemed probable, the withdrawal of whales from active positions could postpone such a scenario in the near term.
Disclaimer: The opinions expressed in this article do not constitute financial or investment advice and solely represent the views of the author.