- XLM was trading below the 200 Exponential Moving Average (EMA) on the daily timeframe.
- XLM price could drop 12% to $0.083 if the daily candle closes below $0.0915.
At the time of writing, Stellar (XLM) appeared to be on the verge of breaking out of a double top price action pattern. This is especially important given the current overall bearish sentiment across the cryptocurrency markets, and the top cryptocurrencies have been under significant selling pressure recently.
A double top collapse signals a bearish outlook.
Based on price action and technical analysis, a double top is a bearish pattern that signals the possibility of a sharp decline in price after breaking the neckline.
In addition to the bearish outlook indicated by this price action pattern, XLM is trading below its 200 Exponential Moving Average (EMA) on a daily basis, indicating a downtrend.
Source: TradingView
Due to these factors, there is a high possibility that the price of XLM will fall by 12% to $0.083 in the coming days. However, traders should wait until the daily candle closes below $0.0915.
If this happens, the fault is considered to have been successfully resolved.
Liquidation levels and market sentiment
The current major liquidation levels are near the $0.091 level at the bottom and $0.0948 at the top, according to data from on-chain analytics firm CoinGlass.
In fact, this data also indicates that traders are overleveraged at this level.
Source: CoinGlass
If market sentiment remains unchanged and XLM falls to the $0.091 level, long positions worth around $280,000 will be liquidated. Conversely, if sentiment changes and the price soars to the $0.0948 level, short positions worth $170,000 will be liquidated.
On-chain metrics and XLM price analysis
Additionally, CoinGlass’s exchange liquidation map suggests that sellers have been less dominant recently. It also suggests that XLM could see a price reversal despite its significant crash.
Here, it is worth looking at another on-chain metric, the OI-Weighted Funding Rate. This is used to track market sentiment and helps predict potential upward movements in asset prices. According to CoinGlass, XLM’s OI-Weighted Funding Rate is positive, sitting at 0.0019% at the time of writing.
Source: CoinGlass
Considering all these indicators and price movements, it is difficult to predict where the price will go in the coming days. However, if XLM closes the daily candle below the $0.0915 level, the outlook may change.
At the time of writing, XLM was trading at $0.0938 after a slight decline of 0.2% over the past 24 hours. Meanwhile, open interest also fell by 2.3% over the same period, indicating less interest from traders amid the market downturn.