XLM Price Plunge: Can a Short Squeeze Rescue Stellar?
Stellar (XLM) Price Outlook Turns Bearish: Is There Any Hope?
Stellar's (XLM) recent price gains are evaporating, with a 6% drop in the past week. This decline has erased short-term momentum, raising concerns about further downside.
While XLM saw a 41% increase over three months, current trends indicate that sellers are regaining control. The possibility of a price recovery now hinges on an unlikely market condition: a short squeeze.
Bearish Signals Mount: EMA Crossover Confirmed
Analysis of the 4-hour chart reveals a concerning trend: XLM's price has fallen below key Exponential Moving Averages (EMAs). Specifically, it's trading below the 20, 50, 100, and 200-period EMAs.
A bearish EMA crossover, where the 50 EMA has dropped below the 100 EMA, has also formed. This "Death Cross" pattern often signals further price corrections.
The Bull-Bear Power (BBP) indicator reinforces this bearish outlook, showing strong selling pressure. The BBP is now in negative territory, indicating that sellers dominate the short-term price action.
Short Squeeze: XLM's Unlikely Savior?
Data from Bitget indicates a significant imbalance in trader positioning. Over the past week, nearly $75.82 million in short liquidations were recorded, compared to approximately $20 million in long liquidations. This highlights a strong bearish sentiment surrounding XLM.
This heavily shorted market presents a unique opportunity. Should broader market conditions improve, even a slight price increase could trigger a short squeeze. This occurs when traders forced to cover their short positions drive prices higher, potentially leading to a rapid recovery.
Key Price Levels to Watch
XLM has broken down from its recent pennant formation. The immediate support level is now at $0.40. A clean break below this level, combined with the bearish EMA crossover and BBP, could push the price towards $0.36.
However, if a short squeeze materializes and XLM reclaims the $0.42 to $0.44 zone, the current bearish structure would be invalidated, potentially sparking renewed buying interest.
For now, bears remain in control. The possibility of a short squeeze is the only bullish scenario on the horizon.