After a continuous price decline, the cryptocurrency market seems to be recovering and Stellar (XLM) appears to be regaining its bullish momentum. In the last three days, XLM has experienced a price drop of over 18% and has also broken the crucial support level at $0.403.
XLM bulls back
However, with today’s upside momentum, XLM has returned to the support level and is poised for further gains. The possible reason for this price recovery in the crypto market, including XLM, is the upcoming inauguration of newly elected President Donald Trump, scheduled for January 20, 2025.
With this potential price recovery, the XLM daily chart has formed an ideal setup for traders looking to go long, with a perfect risk-reward ratio.
XLM technical analysis and upcoming levels
According to XLM’s daily chart, traders can see an attractive risk-reward ratio of 1:5.6, with a stop loss at $0.38 and a target at $0.60.
Delving deeper into the analysis, expert technical analysis suggests that XLM is forming a bullish, inverse head-and-shoulders price action pattern on the daily time frame.
Based on the recent price action, if XLM closes its daily candle above $0.415, there is a strong possibility that it could rise significantly and complete the speculated price action pattern.
Traders overused positions
Looking at this bullish outlook, traders appear to be building long positions, as evidenced by the on-chain analytics firm Mint glass.
According to the data, the key liquidation level on the downside is $0.388, with traders holding significant long positions worth $7.47 million. However, $0.422 is another major liquidation area where short sellers have built up more than $2.09 million in short positions.
These levels are areas where traders are over-leveraged and have the potential to be liquidated if the price moves to either level.
Current price momentum
Currently, XLM is trading around $0.418 and has witnessed a price increase of over 4.5% in upside momentum. However, during the same period, trading volume has also increased, indicating greater participation from traders and investors.
Credit : coinpedia.org
