Stellar (XLM), an open-source blockchain designed for payments and remittances, has formed a double-top pattern—a technical indicator signaling potential trend reversal favoring bears. On-chain metrics further reinforce this downtrend, with negative OI-weighted funding rates and a bearish long/short ratio.
Key Factors Behind XLM’s 6% Drop
Technical Breakdown:
- XLM rebounded from $0.0933 in early August but failed to sustain above the neckline at $0.0931, confirming the double-top pattern.
- A daily close below this level could trigger a 6% drop to retest the August 6 low of $0.0879.
Momentum Indicators:
- RSI (49) and AO (-0.002) hover below neutral, reflecting dominant bearish momentum.
- Sustained selling pressure may extend losses by 14% toward $0.0757 (August 5 low).
Market Sentiment:
- OI-Weighted Funding Rate: -0.0083% (short positions paying longs) signals bearish dominance.
- Long/Short Ratio: 0.86, indicating more traders anticipate further decline.
Potential Reversal Triggers
A daily close above $0.1031 would invalidate the bearish outlook, potentially driving a 3% rally to $0.1066 (July 31 high).
FAQ
Q: Is XLM’s drop linked to broader crypto market trends?
A: Yes. Weak sentiment across cryptocurrencies exacerbates XLM’s technical breakdown.
Q: What’s the short-term target for XLM?
A: $0.0879 if current support fails. A broader market recovery could shift the trajectory.
Q: How reliable is the double-top pattern for XLM?
A: While historically accurate, external factors (e.g., regulatory news) may override technical signals.
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Disclaimer: This analysis is based on historical data and market conditions. Always conduct independent research before investing.
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