Stellar (XLM) has been experiencing a prolonged downtrend for nearly three months. Despite some attempts at recovery, the altcoin faces significant hurdles ahead. 

This is due to a potential breakout above the $0.325 resistance looking increasingly unlikely. Given current market conditions, the price may continue to struggle.

Stellar Faces A Death Cross

Stellar’s price action is currently being influenced by the approaching Death Cross, a bearish signal in technical analysis. The 200-day Exponential Moving Average (EMA) is closing in on crossing over the 50-day EMA, which would mark the second Death Cross for Stellar this year. The previous crossover occurred in April 2024, and this new cross could further signal weakening price momentum for the altcoin.

The potential Death Cross suggests a shift toward more sustained selling pressure. This could prevent any breakout above the $0.30 level and potentially push the price lower.

The overall macro momentum of Stellar is also reflecting a bearish outlook. The Chaikin Money Flow (CMF) indicator, which tracks the accumulation and distribution of assets, shows a sharp downtick this month. Currently, well below the zero line, this suggests that outflows are dominating inflows, indicating that investors are pulling their money out of XLM. 

This outflow trend reflects growing bearish sentiment among investors, which tends to exacerbate the asset’s struggle to recover. Without an influx of buying pressure, XLM may find it difficult to regain upward momentum.

XLM Price Aims At Break Out

At the time of writing, XLM is trading at $0.272, holding above its support at $0.259. The altcoin has been moving within a descending wedge for the past three months, but given the current market conditions, a breakout from this pattern in the near term seems unlikely. The ongoing Death Cross and bearish market sentiment will likely keep XLM in this range.

As long as XLM remains consolidated under $0.299, it could face further declines. If the altcoin falls below $0.259, it might test $0.231 or lower. The formation of a Death Cross could trigger additional selling pressure, further confirming the bearish outlook for Stellar in the coming days.

For the bearish thesis to be invalidated, XLM would need to breach $0.299 and push past the $0.325 resistance level. A successful breakout above $0.355 could signal a reversal and allow the altcoin to move beyond the current downtrend, but such a scenario would require a shift in market sentiment and investor confidence.

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