Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Deep retracement wiped out a significant portion of recent gains by XLM.
- Long/short positions reveal a cautious approach in the futures market.
The market correction over the past 72 hours has seen Bitcoin [BTC] and major altcoins shed a decent portion of their recent gains. Stellar Lumens [XLM] had earlier broken out of a compact range with 46.3% gains within a 24-hour period.
However, more than half of those gains have been wiped out with XLM trading under the $0.130 resistance level, as of press time.
Read Stellar Lumens’ [XLM] Price Prediction 2023-24
With BTC dropping below $30k, will XLM sellers take advantage of this retracement or is it a bear trap?
Has the bullish rally reached its limit?
Source: XLM/USDT on Trading View
The break out of XLM from its compact trading range saw the altcoin reach a year-high of $0.198. Riding on the Fear Of Missing Out (FOMO) generated from Ripple’s positive judgment, XLM flipped bullish on its daily timeframe.
Despite the bullish gains, a sharp retracement followed which saw the price dip below the $0.130 resistance level. With price hovering just below the key level, two distinct possibilities could play out in the long term.
The 12-hour timeframe highlighted the current selling pressure. Bears could take advantage of this to initiate a sustained downtrend with a bearish candle close below the resistance triggering a significant downward move.
On the other hand, the retracement could be a bearish fake out with bulls looking for new long opportunities. This could see another price rally from the $0.130 level, especially if Bitcoin recovers the $30k-$31k price zone.
Meanwhile, the Relative Strength Index (RSI) dipped out of the overbought zone but remained above the neutral 50. This highlighted the presence of decent buying pressure for XLM. The Chaikin Money Flow (CMF) turned negative with a reading of -0.03. This hinted at capital preservation moves by day traders.
Market speculators adopt a cautious approach
Source: Coinglass
How much are 1,10,100 XLMs worth today?
The exchange long/short ratio data from Coinglass revealed a tentative attitude by market speculators. Shorts and longs were almost matched with shorts holding a slim 50.59% share over longs 49.41% share of all open XLM contracts.
This leaves a window of opportunity for either bears or bulls to take advantage of, based on the market’s reaction to Bitcoin’s price action.