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

Key Takeaways:

Like many other altcoins, Stellar (XLM) price has experienced an underwhelming year-to-date (YTD) performance.

Within this period, XLM’s price has fallen by nearly 40%, with most of these losses stemming 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

Stellar’s price previously fell 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.

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. 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, then XLM’s price could find it challenging to rally above $0.30, as initially stated.

On the other hand, a shift in the narrative could be seen if the Average Directional Index (ADX) begins to increase. The ADX measures directional strength. When it rises above a reading of 25, directional strength is strong, and the price can increase.

On the daily chart, the ADX has now 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 Chaikin Money Flow rises above zero, confirming buying pressure. If validated, XLM’s next move could be a rise to $0.30.