According to the materials of the site - By COINTURK NEWS
Stellar (XLM), a notable player in the cryptocurrency market, demonstrated significant growth at the beginning of this year, but in recent months there has been a noticeable decline. In just the last month, the price of XLM has fallen by 16.1%, and over the last week, this decline reached 8.2%. In the last 12 hours, a decrease of 1.7% has also been recorded. Despite a pleasant annual growth for investors of about 300%, current technical indicators point to increased selling pressure.
The decrease in futures trading volumes amplifies selling pressure
Initially, the weakening of the futures market was accompanied by negative signals for Stellar. A high volume of open positions can accelerate price fluctuations and lead to sharp jumps. However, the open interest volume, which peaked at $588.53 million on July 18, has decreased by almost 50% to $306.22 million. This decline indicates a weakening of the potential for new bullish waves in the market.
The reduction in futures trading volume may lead to a more significant impact of instant buys and sells on the price. This situation is considered one of the factors that can intensify selling pressure in the spot market.
Exponential moving average (EMA) indicators used in technical analysis also indicate negative signals in the short and medium term. On the 12-hour price chart, the fall of the 20-day EMA below the 50-day EMA has given sellers an advantage in the short term. Similarly, a potential fall of the 50-day EMA below the 200-day EMA on the 4-hour chart recalls previous declines and is seen as a factor that intensifies selling pressure.
The EMA indicator reacts more quickly to price movements, increasing the weight of current prices. A fall of the short-term EMA below the long-term EMA typically indicates the persistence of selling pressure and the likelihood of a continued downward trend.
On daily charts, the price of XLM is moving within a formation known as a descending triangle, which is generally considered a bearish continuation pattern. It is noted that the price fluctuates around $0.39, slightly above support levels of $0.38 and $0.36.
If these support levels are broken downwards, technical indicators suggest that the price could retrace to the level of $0.23. Based on current prices, this scenario adds a risk of a decline of about 40%.
The negative forecast for Stellar can be summarized in three key points: the decrease in futures volume, the crossover of the EMA downwards, and the formation of a descending triangle on the daily chart. It is claimed that investors need to overcome peak levels again, and the price needs to rise above $0.43 to prevent further selling pressure.
Stellar's price analysis warns: "If the closing price is above $0.43, a breakout of the triangle upwards may negate the bearish scenario and provoke a price recovery."
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