Stellar's XLM surges by 22% in a week - Will the uptrend continue?

Stellar’s XLM surges by 22% in a week – Will the uptrend continue?

23 July 2023

in XLM

Reading Time: 8 mins read

In the last week, XLM’s price grew by double digits.
With changing sentiments, a price retraction might occur this week.

Posting double-digit gains of almost 25% in the last seven days, Stellar Lumens [XLM] ranked as the second crypto asset with the highest price growth in the last week, according to data from CoinMarketCap.

Read Stellar Lumens’ [XLM] Price Prediction 2023-24

In the last month, XLM’s value rallied by 78%. This occurred despite sharing a statistically significant positive correlation with leading Bitcoin [BTC], whose price remained stagnated during the same period.

Gains abound, but there is a catch

At press time, Stellar’s native token exchanged hands at $0.155. The token commenced a new bull cycle on 12 July, when the MACD line intersected the trend line in an upward direction. This crossover signaled the shift in momentum from bearish to bullish and confirmed the continuation of the existing price uptrend. XLM’s value has since gone up by 67%.

Also, a look at the alt’s Awesome Oscillator (AO) indicator revealed that trades since mid-July have been represented mainly by tall green histogram bars that have rested above the zero line. When an asset’s AO returns bars that sit above the zero line, this suggests that short-term momentum is greater than long-term momentum, indicating bullish momentum.

Further key momentum indicators Relative Strength Index (RSI) and Money Flow Index (MFI), were positioned above their respective center lines at press time and have been in the past few weeks. With these indicators still maintaining an upward trajectory, XLM accumulation has climbed since the commencement of the bull run, hence, the continued price growth.

Source: XLM/USDT on TradingView

An on-chain review of the token’s Open Interest confirmed this has also grown. When an asset’s Open Interest surges, it indicates a substantial increase in the number of open positions in the market. With an accompanying price rally, the growth in Open Interest signaled a rise in trade positions being opened by XLM traders.

Source: Coinglass

XLM sails muddy waters

A closer look at XLM’s performance on-chain revealed that the new week might be plagued by a price retracement. Firstly, weighted sentiment tumbled and flipped into negative territory two days ago. As of this writing, the metric remained below zero at -0.56. This suggests that investors were beginning to lose faith in any further price growth.

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Source: Santiment

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While Open Interest climbed, an assessment of XLM’s funding rates across exchanges revealed an uptick in the number of short positions opened against XLM. While short traders have logged losses due to XLM’s price growth, they remain fervent in placing bets against XLM.

Source: Coinglass

How much are 1,10,100 XLMs worth today?

In addition, on a D1 chart, XLM’s price traded dangerously close to the upper band of its Bollinger Bands indicator. This signaled that the alt might be overbought. And that a price correction lurked on the horizon.

Lastly, despite the growth in price, its Chaikin Money Flow trended downwards. This created a bearish divergence that is often taken as a sell signal by traders.