Stellar Lumens [XLM]: 46.3% gains in 24 hours – what’s the catch?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- XLM rode a bullish wave to break past the key resistance level with 46.3% gains.
- Shorts suffered losses worth $6.56 million in the futures market.
Altcoins rallied significantly on the back of the favorable ruling for Ripple [XRP] in its case against the US Securities Exchange Commission (SEC). Stellar Lumens [XLM] benefitted notably from this rally with 46.3% gains in the past 24 hours.
This saw it rise to the #4 position on the top trending cryptocurrencies on Coinmarketcap.
Read Stellar Lumens’ [XLM] Price Prediction 2023-24
With a lot of XLM sellers caught napping by the sudden price reversal, will this lead to more gains for XLM, or is a retracement in progress?
XLM rises out of the ashes
Source: XLM/USDT on Trading View
XLM has been trading in a compact range between $0.074 and $0.112 since January 2023. With $0.096 acting as a mid-point between the range high and range low, the price failed to break any of the range levels.
After a strong rally from the range low of $0.074 in mid-June, the price found the $0.112 barrier insurmountable once again. This latest rejection at the $0.112 range high saw the price dip to the mid-range point of $0.096 with bears looking to ride the selling pressure down to the range low.
However, the favorable ruling for XRP spurred XLM to new 2023 heights. Ripple [XRP] and Stellar [XLM] are correlated as they are the top altcoins for cross-border transactions. The daily timeframe showed that XLM surged to a new 2023 high of $0.197 before retracing to trade at $0.143, as of press time.
The on-chart indicators highlighted the bullish momentum. The Relative Strength Index (RSI) rose sharply into the overbought zone and remained there with a reading of 73, as of the time of writing. This hinted at significant demand for XLM. The Moving Average Convergence Divergence (MACD) also posted a bullish crossover with huge green bars.
Potential buyers who missed the huge bullish spike can wait for a daily candle close on the current retracement or a retest of the $0.130 support. Buyers can look to ride the bullish gap that needs to be filled on the next leg to the year-high.
Shorts wrecked massively
As the bullish momentum reverberated across the crypto market, short traders were left licking their wounds. Across the major cryptocurrencies, shorts experienced three times as many losses as longs. XLM shorts saw open positions worth $6.56 million liquidated over the past 24 hours.
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With steady funding rates over the same period, XLM could ride the bullish momentum higher. However, bulls should be wary of profit-taking activities which could open opportunities for sellers in the mid to long-term.