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- Stellar (XLM) may see a 12% decline after breaking down from a bearish double-top pattern.
- Key liquidation levels around $0.091 and $0.0948 could trigger significant price movements.
Stellar (XLM) has recently shown signs of potential downside movement following a breakdown from a double-top price action pattern. This bearish technical indicator implies that the price of XLM could be about to plummet in the near future. The market sentiment is still mostly bearish, which puts more pressure on Stellar and other cryptocurrencies.
The double top pattern is a popular bearish formation that predicts that the price will drop after breaking through the neckline. Stellar has recently deviated from this pattern, and this has caused some apprehension among traders and analysts, especially given that the cryptocurrency is currently trading below the 200 Exponential Moving Average on the daily chart. This position below the 200 EMA also supports the bearish trend, which makes it possible to predict a drop of 12% in XLM’s price, targeting the $0.083 level.
However, market participants are encouraged to wait for confirmation before making their next move. A daily candle close below the $0.0915 level would confirm the breakdown and likely trigger further selling pressure. Until this confirmation, caution is urged, given the precarious nature of the current price action.
Potential Liquidations Could Trigger Further Price Volatility
Data from on-chain analytics provider CoinGlass shows specific liquidation thresholds that may affect the XLM price. On the flip side, major liquidation levels are near $0.091, while on the upside, they are around $0. 0948. Due to the high leverage used by traders at these levels, even a small price change could lead to liquidations.
For instance, if XLM declines to $0. 091, around $280,000 worth of long positions are exposed to liquidation. On the other hand, if the price goes up to $0. 0948, $170,000 in short positions could be closed out. This makes the situation even riskier, given that the market sentiment is still rather delicate.
However, CoinGlass’s exchange liquidation map shows that the bearish sentiment has not been overwhelming. This means that price reversal may still be an option even if there is a critical breakdown.
On-Chain Metrics Suggests Slight Positive Outlook
Apart from liquidation data, another important on-chain indicator is the Open Interest (OI)-weighted funding rate. This indicator which is the market sentiment is slightly positive for Stellar with the percentage standing at 0. 0019%. This positive funding rate might imply that the traders could be in anticipation of an upward price movement notwithstanding the general bearish market.
However, the total Open Interest of XLM has reduced by 2. 3% in the last 24 hours which is indicative of declining traders’ interest. This decline in Open Interest may indicate that traders are losing confidence in the market as they choose to liquidate their positions in such conditions. At the time of writing, Stellar (XLM) is trading around the $0.0938 level, having experienced a modest decline of 0.2% over the past 24 hours.
On the other hand, as previously reported by CNF, Simplex, a popular cryptocurrency payment processor, announced that it would add USD Coin (USDC) on the Stellar network. This integration with Simplex and StellarOrg means that customers are now able to buy USDC on the Stellar network with fast and cheap transactions.