After a prolonged phase of price decline, the cryptocurrency market is showing signs of recovery, with Stellar (XLM) regaining its bullish momentum. Notably, XLM experienced a substantial price drop of over 18% in the past three days, dipping below its crucial support level at $0.403. However, recent developments suggest a potential turnaround.
XLM Bulls Back
With the current upward momentum, XLM has managed to return to its support level, positioning itself for potential gains. This price recovery across the crypto market, including XLM, is possibly linked to the anticipated inauguration of President-elect Donald Trump, scheduled for January 20, 2025. This political event may be influencing market sentiments, prompting a positive outlook for XLM.
As a result of this potential price recovery, the XLM daily chart presents an ideal setup for traders aiming to go long, offering a favorable risk-to-reward ratio.
XLM Technical Analysis and Upcoming Levels
Analyzing XLM’s daily chart, traders are presented with an enticing 1:5.6 risk-to-reward ratio, with a stop loss positioned at $0.38 and a target set at the $0.60 mark. Delving deeper into the technical aspects, experts highlight that XLM is forming a bullish inverted head-and-shoulders pattern on the daily timeframe. This pattern is a key indicator of potential upward movement.
Should XLM manage to close its daily candle above the $0.415 mark, there is a high likelihood of a significant price increase, potentially completing the anticipated price action pattern.
Traders and Over-Leveraged Positions
In light of this bullish perspective, many traders are establishing long positions, as evidenced by data from the on-chain analytics firm Coinglass. The data reveals a major liquidation level at $0.388, where traders have accumulated significant long positions worth $7.47 million. Conversely, $0.422 marks another critical liquidation point, with short sellers building over $2.09 million worth of short positions.
These levels are crucial as they represent areas where traders are over-leveraged, creating potential for liquidation if the price fluctuates towards either end.
Current Price Momentum
Currently, XLM is trading close to $0.418, having experienced a price surge exceeding 4.5% in upward momentum. This increase in price is accompanied by a rise in trading volume, indicating heightened activity and interest from both traders and investors.
The cryptocurrency market’s dynamic nature, coupled with political and economic influences, continues to shape the trajectory of assets like Stellar (XLM). As traders navigate these waters, keeping an eye on technical patterns and market trends will be crucial for making informed decisions.
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