The XLM coin, the primary asset of the Stellar network, is facing a significant downside risk due to a bearish formation observed in the four-hour timeframe. The altcoin is striving to maintain its position above a crucial support level, while technical indicators suggest a possible 30% decline in the short term.
XLM Technical Analysis and Potential Scenarios
The pronounced head and shoulders formation on XLM’s four-hour chart is interpreted as a classic bearish signal. For the formation to complete, the altcoin must see levels below $0.265. If this level is breached, the technical target is set at $0.19. Moreover, XLM is trading below the 200 Exponential Moving Average on both daily and four-hour timeframes, confirming the downward trend.
Market Data on Stellar
Coinglass data reveals that there are $500,000 worth of long positions accumulated at the $0.27 level. Additionally, $2 million worth of positions at the $0.285 level supports the bearish scenario. The distribution of open positions suggests that bulls have lost control and that prices could decline further.
Market Conditions and Their Impact on XLM
Low market participation may leave XLM vulnerable against technical levels. Particularly, high volatility in Bitcoin (BTC) and macroeconomic uncertainties create additional pressure on altcoins. This scenario implies that breaking through Stellar’s short-term supports could trigger stop-loss orders from investors, accelerating the downward trend.
The market shows signs of uncertainty and volatility, which may exacerbate the bearish outlook for XLM. Investors and traders should monitor key support levels and respond to changing market conditions.
