- The recent market correction led to a significant reduction in XLM’s gains.
- Long/short positions in the futures market indicate a cautious approach among investors.
Analyzing Stellar Lumens’ Recent Performance Amid Market Corrections
In the last 72 hours, the crypto market has undergone a correction, leading to Bitcoin [BTC] and other major altcoins relinquishing a significant portion of their recent profits. Stellar Lumens [XLM] had earlier burst out of a tight range with a whopping 46.3% gain within a 24-hour span. However, at press time, over half of those gains had been eradicated, with XLM trading below the $0.130 resistance level.
Potential Outcomes: Bearish Downturn or Bullish Recovery?
The rise in XLM’s value from its narrow trading range pushed the altcoin to an annual high of $0.198. A FOMO (Fear Of Missing Out) wave, triggered by the positive judgment on Ripple, saw XLM turn bullish on its daily timeframe.
Despite these bullish strides, a rapid retracement ensued, driving the price beneath the $0.130 resistance mark. With the price teetering just under this critical level, two potential scenarios could unfold.
The 12-hour timeframe underscores the present selling pressure. Bears may seize this opportunity to instigate a sustained downtrend, with a bearish candle close below the resistance level potentially triggering a substantial downward shift.
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Contrastingly, this retracement could be a deceptive bearish move, with bulls scouting for new long opportunities. There might be another price surge from the $0.130 level, particularly if Bitcoin recoups the $30k-$31k price zone.
Currently, the Relative Strength Index (RSI) has slipped out of the overbought zone but remains above the neutral 50, suggesting a healthy buying pressure for XLM. The Chaikin Money Flow (CMF), however, has turned negative with a reading of -0.03, indicating that day traders may be opting for capital preservation strategies.
Market Speculators Treading Cautiously
Coinglass’s exchange long/short ratio data reveals a cautious stance among market speculators. Shorts and longs are nearly matched, with shorts holding a slender 50.59% share over longs 49.41% share of all open XLM contracts. This cautious approach presents an opportunity for either bears or bulls to exploit, depending on the market’s response to Bitcoin’s price movements.
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