- Stellar surged more than 170% in the past week to hit a new yearly high of $0.23.
- Crypto enthusiasts seem to be growing overwhelmingly bullish about the recent price action, suggesting that a correction is underway.
- If sell orders begin to pile up, XLM could drop towards $0.13.
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Altcoin traders have waxed bullish about Stellar Lumens since its native token XLM skyrocketed more than 170% in the past week. However, multiple technical indicators suggest caution.
Stellar Lumens Explodes as Investors Grow Bullish
Stellar Lumens’ social engagement metrics went through the roof after the altcoin’s impressive bullish price action. Crypto insights provider LunarCRUSH recorded more than 7.7 million engagements on Nov. 25 alone, representing a 1,200% increase in the past four days.
More importantly, over 70% of all the social interactions have been bullish about XLM. The factors behind this dynamic are varied, according to Gerald Votta, director of communications at Quantum Economics. He said:
“If we look at the holdings of Grayscale, we can see that it has been purchasing several digital currencies, including BTC, LTC, XLM, XRP, and ETH. Institutions, retail, and accredited investors are looking for better returns as bitcoin approaches its all-time high. This is also driven by emerging-market fiat currencies being devalued and a spike in interest again from the Asian markets, as China openly promotes cryptocurrencies to its citizens and both Japan and South Korea see China’s strides and will not be outdone in the region.”
LunarCRUSH takes into consideration the depth of community interaction across all social posts.
These include favorites, likes, comments, replies, and other metrics. By analyzing these metrics, the California-based startup maintains that the Stellar community has grown overwhelmingly bullish.
Unfortunately, high volumes of social mentions during a price pump often leads to short-term consolidations or even steep corrections.
Uptrend Approaches Exhaustion
A spokesperson from the analytics platform, Cryptowat.ch, supports the bearish outlook after telling Crypto Briefing that Stellar Lumens is hovering around “overbought territory.”
“XLM has been on a tear over the last week, rising with increased volume by 175% in the last 7-days and over 50% in the last day. Daily RSI—a measure of relative trend strength—is now clearly in the overbought territory with a current 3-year high of a score of 92 on a 100 point scale.”
In the event of a retracement, one of the most critical support levels underneath XLM lies between $0.13 and $0.10 based on the Fibonacci retracement indicator.
Here is where the 50% and 38.2% Fibonacci retracement levels sit when measuring this metric from mid-March’s low of $0.03 to the recent high of $0.23.
But before prices can fall to this point, the 78.6% and 61.8% Fibonacci retracement levels may try to contain the downward price action. These demand walls are hovering at $0.18 and $0.15, respectively.
It is worth mentioning that the pessimistic scenario will be jeopardized by a daily candlestick close above the recent high of $0.23. If buying pressure continues and Stellar can move past this resistance barrier, prices may jump towards the 127.2% or 161.8% Fibonacci retracement levels.
These potential bullish targets sit at $0.28 and $0.30, respectively.
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