Stellar ($XLM ) is navigating conflicting technical indicators as its bearish trajectory deepens. Over the past 30 days, the cryptocurrency has declined by 29%, retracing from its highest levels since 2021. A death cross formation on December 20 signals heightened bearish momentum, yet increased buying activity, as evidenced by the Chaikin Money Flow (CMF), suggests a potential shift in sentiment.
Directional Movement Index (DMI): Bearish Momentum Intensifies
The Directional Movement Index (DMI) for Stellar underscores a strengthening bearish trend. The Average Directional Index (ADX), which measures trend strength independent of direction, rose from below 20 to 26.8 over four days. An ADX reading above 25 indicates a robust trend, suggesting the downward movement in XLM may persist.
Current DMI readings show the negative directional indicator (D-) at 21.5, significantly higher than the positive directional indicator (D+) at 13.2. This disparity, combined with the ADX above 25, confirms the bearish dominance. As the trend gains momentum, downward price action appears likely to continue in the near term.
Chaikin Money Flow (CMF): Signs of Institutional Buying
While the DMI highlights bearish conditions, the CMF presents a contrasting narrative. Over the past 24 hours, the CMF for XLM surged from 0.03 to 0.19, marking the highest level since November 24. The CMF measures buying and selling pressure by analyzing price and volume dynamics. Positive values above zero indicate accumulation, while negative values signal distribution.
This dramatic spike in CMF suggests significant institutional accumulation and increased buying pressure. Historically, such sharp positive shifts in CMF precede upward price movements, as they indicate strong conviction among larger market participants.
XLM Price Outlook: Bearish Continuation or Reversal?
The death cross formation on December 20, where the short-term moving average crossed below the long-term moving average, reinforces the bearish outlook for XLM. Immediate support at $0.31 is critical for maintaining price stability. Should this level fail, XLM could drop further, potentially testing the $0.25 level.
However, the bullish implications of the recent CMF surge suggest the potential for a trend reversal. If XLM capitalizes on this influx of buying pressure, it may retest the $0.40 resistance level. A successful breakout above $0.40 could lead to further gains toward $0.47, offering a potential upside of 34% from current levels.
Key Levels to Watch
Support: $0.31, with downside risk to $0.25 if breached.
Resistance: $0.40, with further targets at $0.47 if buying momentum sustains.
Conclusion
Stellar’s price remains at a critical juncture, with bearish signals dominating the technical landscape. However, significant institutional buying, as indicated by the CMF, introduces a possibility for a bullish reversal. For a sustained recovery, XLM must hold above key support levels and overcome the immediate resistance at $0.40. Investors should closely monitor these levels and the interplay between bearish trend strength and bullish accumulation signals in the coming days.
