Stellar (XLM) has had an incredible run in the markets since the Coronavirus crash of mid-March.
XLM has outperformed XRP in the same time period.
XLM’s high social volume hints of Stellar experiencing a local top.
The digital asset of Stellar (XLM) has had an amazing recovery from the Coronavirus crash of mid-March. During the event, XLM dropped to as low as $0.026. Approximately four months later, and on the 8th of July, Stellar (XLM) hit a 2020 high of $0.0984. This is a 3.78x increment in the mentioned time period. As a result, Stellar (XLM) has outperformed XRP since mid-March as the latter digital asset is still struggling to reclaim its past glory in the crypto markets.
Stellar’s High Social Volume Hints of a Local Top for XLM
However, XLM’s impressive run in the crypto markets is pointing towards a retracement as seen through the high social media activity related to Stellar. According to the team at Santiment, Stellar’s social volume, or hype, is at an 8-month high and indicative of a local top for the digital asset.
The observation by the team at Santiment can be found in the following tweet.
$XLM is showing a telltale sign of a looming local top. Social volume has exploded to an 8-month high. Typically, when crowds hype up an asset to a major deviation from avg. on a rising price, short/mid-term profit taking opportunities present themselves. https://t.co/HO3o2JJZR9pic.twitter.com/gHm6oNrbR8
The possibility of Stellar having experienced a local top at $0.0984 can further be confirmed by the daily XLM/USDT chart below courtesy of Tradingview.com.
Taking a closer look at the chart, the following can be observed.
XLM’s current price of $0.086 is still very much above the 50-day, 100-day and 200-day moving averages.
The over-extension above these moving averages hints at a pullback.
The 50-day moving average provides adequate support around the $0.0724 area.
Trade volume is in the green with the MACD still exhibiting bullishness.
However, the MFI is overextended at a value of 80 and hints of a possible retracement of XLM in the days to come.
The social media hype surrounding Stellar (XLM) is at its 8-month high as illustrated by the team at Sentiment. Furthermore, the increased discussions surrounding XLM point to a possible top. As seen with Bitcoin, whenever social media interaction surrounding a digital asset hits a fever pitch, high chances are that it will experience a correction.
A brief technical analysis of Stellar has confirmed that a pullback is currently underway for XLM.
As with all technical analyses of Stellar (XLM), traders and investors are advised to use risk management techniques such as stop losses and low leverage.