Stellar (XLM) Drops 6% in Hours, Faces 15% Downside Risk

Stellar (XLM) is currently trading around $0.260, hovering just above a key support zone after facing a strong rejection from the 50-day moving average. The recent price action on the daily chart shows a slow bleed over the last few weeks, with XLM price now sitting dangerously close to multiple key demand levels. Short-term sentiment has weakened, as confirmed by the hourly chart, where we recently saw a sharp intraday sell-off that pushed XLM price down nearly 6% in a few hours.

The daily Heikin Ashi chart reveals a consistent series of red candles since mid-May. Stellar price has failed to sustain above its 20-day and 50-day SMAs—currently at $0.27112 and $0.28096 respectively. This rejection implies bearish control is still dominant. Moreover, the price has dropped below the 200-day SMA at $0.333, confirming the long-term bearish structure.

We also see Fibonacci extension levels placed below the current price. Assuming the swing high was near $0.30 and swing low near $0.25, the 1.618 extension projects a possible drop to $0.22, which aligns with an old consolidation support level from March. Calculation: Let’s assume the swing high was $0.30 and low was $0.25. 1.618 extension = 0.25 - (0.05 × 1.618) ≈ $0.169. However, more conservative Fibonacci supports are seen near $0.24 and $0.22, which are visible as dotted horizontal lines on the chart. This gives us a potential 15%–20% downside risk from current levels.

The hourly chart shows a series of large red candles, wiping out a previous 3-day accumulation range between $0.27 and $0.28. Post-drop, we observe a sideways consolidation around $0.259–$0.260, which suggests price is now searching for support. Despite the short rebound attempts, the 20, 50, 100, and 200 SMAs are all stacked in bearish order, with the 20-SMA acting as intraday resistance around $0.265. Unless this flips, XLM price could revisit the recent low at $0.254. The hourly chart also shows attempted accumulation candles, but without increasing volume or bullish divergence, recovery looks weak.

Reversal chances depend entirely on a decisive break above $0.271—the 50-day SMA. If Stellar price closes a daily candle above this level with volume, we could target $0.30 again. This would be a 15% upside from the current price. However, failure to reclaim this level will likely trigger further selling toward $0.24 and possibly $0.22, where bulls could try a stronger defense. A simple risk-reward analysis: Buy at $0.260, stop loss at $0.24 (−7.7%), target $0.30 (+15.4%). Risk/Reward = 2:1, but only if momentum shifts bullish, which isn’t yet confirmed.

If bears maintain control and Bitcoin remains under pressure, XLM price could slide toward the $0.22 zone by the end of June. That would mark a near 15% drop from the current level. On the other hand, any positive macro sentiment or altcoin momentum could push Stellar price to reclaim $0.27 and aim for $0.30, especially if a breakout candle emerges on the daily chart with strong follow-through volume. Right now, the trend is bearish both technically and momentum-wise, with no major bullish reversal signals yet confirmed.

Stellar (XLM), a prominent cryptocurrency, is currently facing significant challenges as it has lost critical support levels, raising concerns among its holders. The recent chart patterns indicate a tightening grip by sellers, which could potentially lead to a major crash. The cryptocurrency, which had shown signs of building momentum, has taken a sharp turn, breaking key trendlines and flashing warning signals. This development has left many investors wary, as the price of XLM appears to be on shaky ground.

The situation is further complicated by the fact that the total value locked (TVL) in Stellar has reached a record high of over $97 million. While this might seem like a positive indicator, the current price trends suggest that the market sentiment is bearish. The Relative Strength Index (RSI) for XLM has failed to cross above the halfway line, indicating a lack of buying pressure. Additionally, the Moving Average Convergence Divergence (MACD) and signal line are showing a downside move, which could prolong the bearish trend.

Analysts have been closely monitoring the situation, and some have predicted that XLM is on the verge of a breakout. However, these predictions are based on the assumption that the TVL will continue to rise, which may not be the case given the current market conditions. The consensus rating for XLM is mixed, with some analysts predicting a bullish trend in the long term, while others are more cautious. The situation is reminiscent of the recent trends in the silver market, where a breakout above $35/oz and a rising gold-to-silver ratio have fueled predictions of a major rally. However, the cryptocurrency market is known for its volatility, and past performance is not always indicative of future results. Investors in Stellar should be prepared for the possibility of a major crash and take appropriate measures to protect their investments.