The cryptocurrency market has been on a rollercoaster ride in recent days, with Stellar (XLM) experiencing a significant price decline of over 18% and breaking through its crucial support level of $0.403. However, the tide seems to be turning, as XLM is now showing signs of bullish momentum.
The recent price recovery in the crypto market, including XLM, can be attributed to the upcoming inauguration of President-elect Donald Trump, scheduled for January 20, 2025. This has injected new optimism into the market, with XLM returning to its support level and potentially gearing up for further gains.
Technical analysis of XLM’s daily chart reveals an attractive risk-to-reward ratio for traders looking to go long. With a stop loss at $0.38 and a target at the $0.60 mark, traders can potentially benefit from a 1:5.6 risk-to-reward ratio.
Looking deeper into the analysis, experts suggest that XLM is forming a bullish inverted head-and-shoulders price action pattern on the daily time frame. If XLM manages to close its daily candle above the $0.415 mark, there is a strong possibility that it could see significant upside momentum and complete the speculated price action pattern.
On-chain analytics firm Coinglass has also revealed that traders are building long positions on XLM. The data shows that there are significant long positions worth $7.47 million at the major liquidation level of $0.388, while short sellers have built over $2.09 million worth of short positions at $0.422. These levels indicate areas where traders are over-leveraged and could potentially face liquidation if the price moves to either level.
Currently, XLM is trading near $0.418 and has witnessed a price surge of over 4.5% in upside momentum. The increased trading volume during this period suggests heightened participation from traders and investors, indicating a renewed interest in XLM.
Overall, the recent price recovery and bullish momentum in XLM present an opportunity for traders to capitalize on potential gains. With the market showing signs of optimism and positive price action, XLM could be on track for further upside movement in the near future.