Stellar's XLM bulls have reached their limit following a surge - Could a decline be imminent?

Stellar's XLM bulls have reached their limit following a surge - Could a decline be imminent?

In the cryptocurrency market, Stellar (XLM) has been making waves as it surpassed its January 2025 high, reaching a peak of $0.515. However, analysts suggest a potential retracement is on the horizon, with the expected depth likely to be around the 50% Fibonacci retracement level at approximately $0.364.

This anticipated retracement is supported by several key factors. After a rapid rally of about 109.7% in a week, XLM bulls show signs of exhaustion, as indicated by bearish divergence signals on the 4-hour chart. This suggests overextended market conditions and the likelihood of a correction.

The rejection from the $0.515 level measured just over 11%, suggesting a possible further correction toward $0.364. It's important to note that this level also corresponds with the February 2025 high, making it a strong support and demand zone where buyers may step in if a pullback occurs.

The weekly chart of XLM maintains a bullish structure, with higher highs and higher lows. Any pullback to this support range could be seen as a healthy retracement rather than a reversal of trend. A more significant drop below the support structure is unlikely unless key levels such as $0.28 are breached, which analysts consider critical for maintaining the bullish outlook.

For traders, this means that the $0.364 area could potentially act as support. They can wait for a dip before buying, as this demand zone coincides with the 50% retracement level of the recent rally. A retracement as deep as $0.28 would still maintain the bullish weekly structure for XLM.

Liquidity will be key, and the price could gravitate to nearby magnetic zones without much sideways price action due to high speculative interest. The liquidation heatmap indicates pockets of liquidity to the south and a cluster of liquidity to the north. Long liquidations are present from $0.445 to $0.395, while a liquidity cluster has built up just above $0.51.

The Chaikin Money Flow (CMF) also shows remarkable capital inflow, with a reading well above +0.05, further supporting the bullish structure of XLM on higher timeframes.

In conclusion, while a retracement is expected for Stellar (XLM), the bullish structure on higher timeframes remains intact. Traders can anticipate a potential retracement depth near $0.364 and consider this area for potential buying opportunities. As always, managing risk carefully is crucial in these market conditions, which are unlikely to see much consolidation.

1. Despite Stellar (XLM) reaching a new high of $0.515 in the crypto market, analysts predict a potential retracement, with the anticipated depth around the 50% Fibonacci retracement level at approximately $0.364.
2. The rejection from the $0.515 level and the overextended market conditions indicated by bearish divergence signals on the 4-hour chart suggest a possible correction to the $0.364 level.
3. The overall bullish structure of XLM, as demonstrated by higher highs and higher lows on the weekly chart, indicates that a pullback to the $0.364 support could be a healthy retracement rather than a reversal of trend.
4. For traders, the $0.364 area could potentially act as support, and they can wait for a dip before buying, as this demand zone coincides with the 50% retracement level of the recent rally.
5. The Chaikin Money Flow (CMF) supports the bullish structure of XLM, with a reading well above +0.05, indicating remarkable capital inflow to the cryptocurrency.

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