XLM has had a significant rise of 23% this month, reaching $0.451. However, the altcoin now faces possible challenges due to increased outflows from investors and diminishing strength of the upward trend.
This raises concerns about the sustainability of this price movement, suggesting that a reversal may be on the horizon.
Stellar investors are pessimistic
The Chaikin Money Flow (CMF) for XLM has fallen below the zero line, indicating an increase in outflows. This change is a sign that investors may be selling their holdings, possibly as a result of the recent price increase.
As investors take profits, these outflows may weaken the support for the price of XLM, leaving it vulnerable to a drop without solid buying support. With more investors exiting, the demand for XLM may decrease, causing the price to lose strength and fall.
XLM CMF. Source: TradingView
The recent upward trend of XLM, confirmed by the Parabolic SAR below the candlesticks, is showing signs of weakening. The Average Directional Index (ADX), which measures trend strength, is approaching the critical threshold of 25.0.
A drop below this level may signal that the active upward trend is losing strength. If the trend weakens, the price of XLM may face a reversal, retreating from recent gains.
XLM ADX and SAR. Source: TradingView
XLM price faces a barrier
The price of XLM is currently at $0.451, remaining above the support at $0.445. The altcoin has risen nearly 23% in the last 11 days, but the crucial resistance at $0.470 remains a challenge. If the token fails to surpass this level again, it may result in a retreat to $0.424, where it could consolidate.
The inability to break the resistance at $0.470 may cause a price drop, with the token consolidating above the $0.424 level. Although the recent rise of the altcoin has been significant, these resistance levels and outflows suggest that the asset may face difficulties maintaining its upward trajectory without strong support.
XLM Price Analysis. Source: TradingView
However, if XLM investors can overcome the resistance at $0.470 and convert it into support, the price could continue to rise. A successful breakout could lead towards the $0.500 level, marking a strong continuation of the upward trend. This would depend on sustained buying interest and a reversal of the current bearish indicators.
The article 'XLM Price Faces Risk: Strong Outflows May Undermine 22% Rally?' was first seen on BeInCrypto Brazil.
