Stellar’s XLM experienced a significant drop of 8% after a remarkable 173% surge, making it the top loser on CoinMarketCap. This pullback may signal a healthy correction before a potential upward movement. Are there indications supporting a similar outlook?
Potential Scenarios for XLM
Looking at the weekly chart, XLM successfully defended a crucial support level at $0.4, increasing the likelihood of the altcoin targeting its previous highs of $0.79 or even surpassing them. The rise in CMF (Chaikin Money Flow) suggests a substantial inflow of funds, potentially paving the way for further upward momentum above $0.4.
Conversely, indicators on the 12-hour chart hint that the continuation of the uptrend might face some delays. The CMF has remained stagnant since November 20th, indicating a pause in the inflow of funds that could impede any significant rally. Moreover, a decrease in trading volume might prompt XLM to retest the support level and liquidity below $0.4.
In the interim, XLM could consolidate within the range of $0.40 and $0.62 before attempting a breakout in either direction.
Impact of Whales Exiting Long Positions
The market positioning of whales in the XLM market aligns with the projected price range. Notably, following profit-taking activities, whales have exited their long positions, as evident from the negative Whale vs. Retail Delta. Typically, the risk-aversion strategy of major players could trigger price consolidation or pullbacks.
Furthermore, the ADX (Average Directional Index), a tool used to measure a token’s price trend strength, dropped significantly from nearly 80 to 21.
If the ADX falls below 20, it could reinforce a weak trend and increase the risk associated with opening new trading positions, especially for swing traders.
In conclusion, while the possibility of XLM’s uptrend continuation remains promising, the withdrawal of whales from prominent positions might postpone this scenario in the short run.
Disclaimer: The views expressed in this article are opinions and do not constitute financial, investment, trading, or any specific advice.