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Key Takeaways:
- The recent correction aligns with overbought indicators but doesn’t undermine the broader bullish trend.
- This key demand zone may act as a launchpad for Stellar’s next leg higher.
- If Bitcoin remains above $116k, XLM bulls could resume their upward push soon.
Stellar’s native token XLM surged by over 110% in a single week, but signs of bullish exhaustion have emerged. The recent 10.6% dip coincided with a broader crypto market correction, including a 4.95% decline in Bitcoin (BTC). Despite the pullback, key indicators suggest bulls may not be done yet.
Minor Correction After Massive Rally
According to AMBCrypto and Coinalyze, Stellar’s 10.6% price retracement was accompanied by a $20 million drop in Open Interest—evidence of profit-taking and long liquidations at the $0.51 resistance level. While this signals a pause in momentum, the overall sentiment remains cautiously optimistic.
Funding rates are still positive, and the spot Cumulative Volume Delta (CVD) has held its uptrend, implying buyers remain active. This could suggest that the recent decline may be a temporary cooldown rather than a full trend reversal.
Fibonacci Levels and Fair Value Gaps Offer Support
A bullish market structure has been in place since July 6, supported by heavy trading volume and upward momentum. Using Fibonacci retracement levels from the June 22 rally, analysts highlight the $0.42–$0.44 zone as a key support area currently under retest.
The daily chart shows this zone aligns with a previously unfilled fair value gap, adding to its significance as a demand region. Both the Accumulation/Distribution (A/D) line and the Chaikin Money Flow (CMF) support the case for strong buyer interest, with the CMF at +0.23—well above the threshold that typically marks healthy capital inflow.
Also Read: Stellar (XLM) Jumps 11% as Bitcoin Hits $122.5K — Analysts Predict $1.29 Breakout
Lower Timeframes Hint at Short-Term Weakness
The 4-hour chart presents a different story. A bearish divergence between the Money Flow Index (MFI) and price indicated weakening momentum just before the drop. The MFI, which had reached an overheated 97.7 level on July 14, has since cooled off, and the CMF has returned to neutral levels.
While the divergence has played out, resulting in a move back to the $0.43 support zone, no signs of aggressive selling have appeared. If Bitcoin dips further below $116,000, XLM may face more downside—but absent that, the path of least resistance remains to the upside.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
