Key takeaways
- Stellar (XLM) remains under pressure despite a modest recovery after last week’s sharp correction.
- Derivatives data show a downward bias, with long-to-short ratios below 1 and funding rates turning negative relative to the asset.
Stellar (XLM) remained under pressure on Tuesday despite making a modest rebound after last week’s sharp market-wide correction.
Weak derivatives positions and mixed on-chain signals suggest that the recent gains may be corrective rather than the start of a sustained bullish reversal.
Market data suggests that traders continue to favor bearish exposure, reinforcing the dovish outlook for both assets.
Derivatives markets are indicating growing bearish sentiment
Recent derivatives data from Queen Glass It indicates increasing pessimism among traders. XLM’s long-to-short ratio fell to 0.73 on Tuesday, approaching its lowest readings in more than a month.
A ratio less than 1 indicates that short positions outnumber long positions, highlighting expectations of further price declines.
The downward bias is also reflected in financing rates. The XLM funding rate turned negative on Monday and continued to decline until Tuesday.
Negative funding rates indicate that short sellers are paying out holders of long positions, and are a sign that traders are increasingly bracing for a downward move.
CryptoQuant’s market summary data provides a mixed but slightly negative outlook for XLM. Data shows high activity in both spot and futures markets, with increased retail participation and buy-side dominance.
While a rise in buying activity may appear positive, overheated market conditions often precede short-term pullbacks, limiting the likelihood of a sustainable recovery.
Stellar Price Forecast: Momentum starts to fade
Stellar is trading near $0.195 on Tuesday, holding above the 50-day and 100-day moving averages at $0.182 and $0.179, respectively.
While this situation supports a neutral to slightly bullish outlook in the short term, XLM still faces resistance at the 200-day moving average near $0.198.
Technical indicators indicate that momentum is cooling down. The RSI is near 45, indicating balanced market conditions. The MACD indicator has fallen below the zero line, indicating weak upward momentum and an increased risk of another downward move if buyers fail to regain control.
If the rally resumes, immediate resistance lies at the 200-day EMA at $0.198, with the next upside target at $0.226.
However, if sellers remain in control, initial support will be seen at $0.185, with the next level at the 50-day EMA at $0.182.
Closing the daily candle below these levels will reveal lower support areas at $1.79 and $1.43.
