Bearish Pattern Sparks Sell-Off Warnings, Posing a 40% Price Drop Risk for XLM

In the midst of market uncertainty, the native token of Stellar, XLM, is showing a bearish trend and is expected to experience a significant price decline. On-chain analytics firm CoinGlass reports that intraday traders are heavily betting on short positions, further supporting this bearish outlook.

Today, on February 6, 2024, the on-chain metric XLM exchange liquidation map revealed that traders with long positions are exhausted and over-leveraged at the $0.3057 level, with $2.26 million worth of long positions. On the other hand, traders with short positions are dominating and over-leveraged at $0.355, with $5.25 million worth of short positions at this level.

However, these positions worth millions of dollars will be liquidated if market sentiment shifts and the price moves in either direction. This on-chain data clearly indicates that the bulls have no power, and the bears are leading the XLM.

The negative perception of XLM may be attributed to the bearish price action and the current economic tensions between the United States, Mexico, Canada, and China.

According to expert technical analysis, XLM has formed a bearish inverted cup and handle price action pattern on the daily time frame and is on the verge of a support or neckline breakdown.

Based on recent price action, if XLM fails to hold this level or breaches the neckline and closes a daily candle below the $0.32 level, there is a strong possibility that it could drop by 40% to reach the $0.20 level in the future.

Despite this bearish price action, the asset is still trading above the 200 Exponential Moving Average (EMA) on the daily time frame, indicating that XLM is in an uptrend.

Currently, XLM is trading near $0.33 and has experienced a price decline of over 7.50% in the past 24 hours. However, its trading volume has dropped by 30% during the same period, suggesting a fear of further price declines.

Tags: Crypto news, Price Analysis