As Stellar (XLM) continues to deepen its downward trend, its price faces conflicting technical signals, having dropped 29% from its highest level since 2021 over the past 30 days. The recent death cross on December 20 indicates increasing bearish pressure, but the surge in buying activity may signal a potential trend reversal.
The DMI indicates enhanced bearish momentum, with the ADX above 25, but the CMF's sharp rise to 0.19 indicates significant institutional buying. This technical divergence sets a critical phase for XLM, with immediate support at $0.31 and potential resistance at $0.40 if bullish momentum continues.
XLM DMI presents a strong bearish trend.
The Directional Movement Index (DMI) of Stellar shows an increasing trend strength, with its Average Directional Index (ADX) rising from below 20 to 26.8 in just four days.
The ADX measures trend strength, regardless of direction. A reading below 20 indicates a weak trend, 20-25 indicates a trend is developing, and above 25 indicates a strong trend. When the ADX rises above 25, it suggests the current trend is gaining momentum and may continue.
Currently, the D+ reading is 13.2, the D- reading is 21.5, coupled with the ADX rising to 26.8, indicating a bearish trend for XLM. The fact that D- (negative directional indicator) is above D+ (positive directional indicator) confirms the bearish nature of the trend.
An ADX above 25 indicates that this downward trend is strengthening and may continue, while the significant gap between D- and D+ enhances the likelihood of a sustained price decline.
The Stellar CMF has risen in the past 24 hours.
The Chaikin Money Flow (CMF) of XLM experienced a sharp rise, jumping from 0.03 to 0.19 in just 24 hours.
The CMF indicator combines price and volume to measure buying and selling pressure. Positive values above zero indicate accumulation, while negative values indicate distribution. The magnitude of the reading (close to +1 or -1) indicates the strength of the money flow.
The CMF surged to 0.19, the highest reading since November 24, indicating strong buying pressure and institutional accumulation.
The significant rise from near neutral territory (0.03) to a significantly positive value indicates a notable change in sentiment, with funds accelerating into Stellar. When the CMF shows such a significant positive shift, it typically signals a price increase, as it reflects strong buying confidence from large market participants.
XLM Price Forecast: Will the downward trend continue?
XLM's price has recently shown clear bearish signals, with a death cross formed on December 20 as the short-term moving average crossed below the long-term average.
This technical pattern indicates increasing selling pressure, and the current support level at $0.31 is crucial for price stability. If this support level fails to hold, the XLM price may further decline to $0.25, indicating significant downside risk.
However, recent Chaikin money flow data suggests that the trend may reverse and exhibit bullish momentum. If the price of Stellar can leverage this positive money flow and establish an upward trend, it may challenge the direct resistance level at $0.40.
Breaking through this level could pave the way for further gains up to $0.47, potentially rising 34% from current levels, but this scenario requires sustained buying pressure to overcome the current bearish technical setup.
In short
In the case of a death cross formation and strengthening bearish trend, XLM has fallen 29% from its 2021 high within 30 days.
Technical indicators show a conflict: the rising ADX indicates a strong downward trend, while the soaring CMF suggests institutional buying.
If bullish momentum emerges, the price will face a key support level at $0.31, with the potential to rise 34% to $0.47.
