The cryptocurrency market is closely watching Stellar Lumens (XLM) as it shows strong recovery momentum. However, a key technical indicator, the TD Sequential, has now issued a sell signal on the 4-hour chart, raising concerns of a potential retracement, according to analyst Ali.
After perfectly timing the bottom, the TD Sequential indicator is now flashing a sell signal on the #Stellar $XLM 4-hour chart! pic.twitter.com/KL25xcFmoR
— Ali (@ali_charts) February 20, 2025
Understanding the TD Sequential Indicator
The TD Sequential, developed by Tom DeMark, is a widely used tool for identifying trend exhaustion and potential price reversals. It operates in two phases: a setup phase (nine consecutive candles closing higher or lower than four candles prior) and a countdown phase (13 additional bars suggesting continued momentum before exhaustion occurs).
A “9” count typically signals a possible reversal, while a “13” count indicates trend exhaustion. With the current sell signal appearing on the 4-hour timeframe, traders are becoming increasingly cautious, as it suggests that bullish momentum in XLM may be weakening.
Implications for Stellar (XLM) Price Action
The TD Sequential’s sell signal often precedes a price correction or consolidation period. Given XLM’s recent upward movement, profit-taking could intensify, triggering a pullback. Historically, Stellar has reacted strongly to such technical signals, making this development particularly significant.
Beyond technical indicators, macroeconomic factors and Bitcoin’s price movements will also play a crucial role in XLM’s short-term trajectory. If the broader market remains bullish, Stellar may consolidate rather than reverse entirely.
Key Support and Resistance Levels to Watch
Support Levels: Should selling pressure increase, XLM could test key support zones between $0.115 and $0.120, which have previously acted as strong demand areas.
Resistance Levels: On the upside, XLM faces resistance near $0.135 to $0.140. A decisive breakout above this range could invalidate the sell signal and drive further gains.
The cautious sentiment among traders is summed up by Emily’s reaction: “Time to keep an eye on $XLM.” Investors are urged to implement risk management strategies, including stop-loss orders and volume analysis.
Also Read: Stellar (XLM) at a Crossroads: Will It Break Out or Plunge Further?
While short-term traders may explore opportunities for profit-taking or short positions, long-term investors might see any potential dip as a buying opportunity. Ultimately, market conditions and key technical levels will determine XLM’s next move, reinforcing the need for a balanced trading approach.
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.
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