Stellar (XLM) has decreased by 10% in the past seven days, causing its market capitalization to struggle to maintain the $10 billion threshold, currently at $10.9 billion. Momentum indicators like RSI show strong weakening, signaling increasing selling pressure and approaching the oversold area.

The Ichimoku Cloud chart further reinforces the bearish outlook, as XLM is currently trading below the cloud with no clear signs of a reversal. Traders are particularly focused on the support level of $0.351, as if it is not maintained, the price could continue to plummet. Conversely, if a recovery occurs, the next resistance level will be $0.4 and higher.

Neutral RSI but clear downtrend

The Relative Strength Index (RSI) of Stellar is currently at 39.9, down significantly from over 60 on December 24. This significant decline indicates that buying momentum has quickly weakened and the market has shifted to a pessimistic sentiment.

The RSI moving from a neutral state to a lower area indicates increasing selling pressure, bringing XLM closer to the oversold region, although it has not fully entered this area yet.

XLM's RSI | Source: TradingView

RSI is a momentum indicator that measures the speed and magnitude of price changes on a scale of 0 to 100. When RSI is above 70, it often signals overbought conditions, and price may correct. Conversely, when RSI is below 30, it may indicate oversold conditions, and a recovery could occur.

With XLM's RSI currently at 39.9 and continuing to trend downward, the coin is trading near the oversold area, indicating that the price may continue to weaken in the short term and even test lower levels. However, if buying pressure returns and creates support for the market, a recovery could occur, helping to halt the decline and create opportunities for price increases.

Ichimoku Cloud confirms bearish outlook

The Ichimoku Cloud chart of XLM shows a strong bearish outlook. The price is currently trading below the cloud (the red and green area), signaling that the downtrend is dominating the market.

The conversion line (Tenkan-sen) is below the baseline (Kijun-sen), further confirming the bearish sentiment and indicating that sellers currently dominate. Moreover, the price has been unable to break through the cloud in recent attempts, further reinforcing the downtrend.

The lagging line (Chikou Span) is below both the price and the cloud, further highlighting the current downward pressure.

The future cloud (red area) shows that Leading Span A (the green line) remains below Leading Span B (the red line), predicting that pessimism will continue in the near future. These indicators suggest that XLM's price will still be under downward pressure, with a reversal only possible with a strong change in market momentum.

Ichimoku Cloud of XLM | Source: TradingView

XLM Price Prediction: Will the support level of $0.351 hold?

Currently, XLM's price is trading near the important support level of $0.351. If this support level is not maintained, XLM's price may face strong downward pressure, with the next support level at $0.31.

However, if XLM can hold and recover from the support level of $0.351, the coin may retest the resistance level at $0.4.

XLM 4-hour price chart | Source: TradingView

Breaking through the resistance level of $0.4 could open up opportunities for XLM to continue rising, with the next target possibly being $0.47, marking a strong recovery.

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