Stellar’s native token XLM has been steadily trending downwards since reaching $0.52 on July 18th at its local cycle peak.
Altcoin, which currently trades around $0.39, has lost 14% of its value in more than two weeks.
XLM’s August Curse will return with the installation of a sales signal
A review of XLM’s monthly returns reveals a worrying pattern. August only offered two positive ends of the month in 2017 and 2021.
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This track record currently intersects with weakening of technical indicators, setting a stage for a potential downward trend as new months begin.
XLM/USD 1-Day Chart measurements show that the double-digit dip of token value is below the 20-day exponential moving average (EMA). This important moving average forms a dynamic resistance above XLM at $0.40 when pressed.
The 20-day EMA measures the average price of assets over the last 20 days, giving weight to recent prices. When prices trade above EMA, they show short-term bullish momentum, suggesting that buyers are under control.
Convergently, when the asset’s price falls below the 20-day EMA, it represents a shift in short-term market sentiment from bullish to bearish. It reflects an increase in sell-side, especially when accompanied by other bearish indicators.
In addition to this bearish outlook, XLM’s Chaikin Money Flow (CMF) slid under the zero line. The CMF reads are located at -0.03 at press and indicate net capital outflow from XLM’s spot market.
The CMF indicator measures how an asset enters and out of the market for an asset. When that value is positive, buyers control the market and capital flows into assets.
Conversely, negative CMFs reflect distribution. This means that sales pressure is stronger and that money is leaving the assets. This trend suggests that the continued price decline in XLM is not simply a result of short-term volatility, but is supported by actual market weakness.
Will it be categorized as $0.32 or will it exceed $0.41?
XLM is currently trading at $0.39 at press time. The weaker demand for Altcoin and its historically poor performance in August suggest that it could enter a broader short-term downtrend over another year. Sentiment is tilted firmly in favor of the bear as indicators of both price momentum and capital flow flash at a red dot.
As capital inflows continue to weaken, XLM prices could fall to $0.36. If this level is not maintained, the downtrend can deepen to as low as $0.32.
However, if buyer demand begins to recover, a reversal is still possible. A sustained increase in accumulation could push XLM above the 20-day EMA. If this breakout continues, the token will regain $0.41, opening the door to a short-term bull reversal.
Another red August on XLM? The data show that its historic patterns first appeared in beincrypto.
