Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Deep retracement wiped out a significant portion of XLM’s recent gains.
- Long/short positions indicate a cautious approach to the futures market.
The market correction of the last 72 hours has seen Bitcoin [BTC] and major altcoins are throwing off their fair share of recent gains. Stellar Lumens [XLM] had previously broken out of a compact range with 46.3% gains in a 24-hour period.
However, more than half of those gains have been wiped out with XLM trading below the $0.130 resistance level, as of press time.
Read Stellar Lumens’ [XLM] Price Forecast 2023-24
Will XLM sellers benefit from this retracement as BTC drops below $30,000, or is it a bear trap?
Has the bullish rally reached its limit?
Source: XLM/USDT on trade view
Breaking XLM out of its compact trading range, the altcoin reached a yearly high of $0.198. Building on the Fear Of Missing Out (FOMO) generated by Ripple’s positive verdict, XLM turned bullish on its daily time frame.
Despite the bullish gains, a sharp retracement ensued that took the price below the $0.130 resistance level. With price hovering just below the key level, two different possibilities could emerge in the long run.
The 12-hour time frame highlighted the current selling pressure. Bears could take advantage of this to initiate a sustained downtrend with a bearish candle close to resistance triggering significant downside movement.
On the other hand, the retracement could be a bearish fake out with bulls looking for new long opportunities. This could mean another price increase from the $0.130 level, especially if Bitcoin recovers the $30,000-$31,000 price zone.
Meanwhile, the Relative Strength Index (RSI) dropped out of the overbought zone but remained above the neutral 50, highlighting the presence of significant buying pressure for XLM. The Chaikin Money Flow (CMF) turned negative with a reading of -0.03. This indicated capital preservation moves by day traders.
Market speculators are cautious
Source: Coinglass
How Much Are 1,10,100 XLMs Worth Today?
The exchange of long/short ratio data from Mint glass revealed a hesitant attitude of market speculators. Shorts and longs nearly matched shorts with a slim 50.59% share over longs 49.41% share of all open XLM contracts.
This leaves an opportunity for both bears and bulls to profit from, based on the market’s reaction to Bitcoin’s price action.
