Stellar's XLM Token Has Climbed 6%

XLM Struggles to Hold Gains

Stellar’s (XLM) price has risen by 6% over the past week as the broader crypto market shows signs of recovery. However, a key momentum indicator is flashing warning signals, suggesting the rally may be short-lived.

Stellar’s Chaikin Money Flow (CMF) has encountered a bearish divergence, indicating decreasing buying pressure despite the recent increase in XLM’s price.

While XLM’s price has climbed to $0.28 at press time, its CMF has fallen further into negative territory, remaining below the zero line at -0.10.

This trend occurs when an asset’s price trends upwards while its CMF falls, signaling that fewer investors are supporting the rally with actual capital inflows.

If the divergence persists, XLM’s selling pressure could build up, increasing the likelihood of a price reversal or correction in the near term.

Moreover, XLM’s funding rate has flipped negative for the first time in six days, highlighting the growing bearish bias against the altcoin. At press time, the figure is -0.0018%.

The funding rate is a periodic fee exchanged between long and short traders in perpetual futures contracts, reflecting market sentiment. When it turns negative, short positions are dominant, indicating bearish sentiment as traders increasingly bet on a price decline.

As more traders bet on XLM’s price to fall, demand will continue weakening, and downward pressure on its price will increase.

XLM Down Over 50% Since November—Is A Reversal On The Horizon?

On the daily chart, XLM trades within a descending parallel channel. It has remained within this bearish channel since reaching a three-year peak of $0.63 last November.

Now trading at $0.28, the altcoin’s price has since plunged 55%.

With strengthening bearish pressure, XLM risks falling below the channel’s lower trendline. If this happens, the altcoin could trade at $0.23.

Conversely, if XLM accumulation resumes, its price could rally past the resistance at $0.30. If succesful, it could attempt to reach $0.41.