The primary network asset of Stellar, XLM coin, is confronting a severe loss risk due to a bearish formation observed in the four-hour timeframe. Currently, the altcoin is striving to maintain its position above a vital support level; however, the prevailing negative market sentiment and technical indicators suggest that the price could experience a decline of up to 30% in the short term. Experts predict that XLM has completed a head and shoulders pattern, forecasting potential drops to $0.19 with candle closures below the $0.265 mark.
XLM Technical Analysis and Potential Scenarios
The pronounced head and shoulders formation on XLM’s four-hour chart is interpreted as a classic bearish signal. For the formation to complete, the altcoin must see levels below $0.265. If this level is breached, the technical target is set at $0.19. Moreover, XLM is trading below the 200 Exponential Moving Average on both daily and four-hour timeframes, confirming the downward trend.
In the last 24 hours, XLM has lost over 4.5% of its value, currently fluctuating around $0.275. A 35% decrease in trading volume indicates that market participants are behaving cautiously. Analysts particularly highlight the risk of liquidation for over-leveraged long positions around the $0.27 level, which could increase selling pressure on the altcoin.
Market Data on Stellar
Coinglass data reveals that there are $500,000 worth of long positions accumulated at the $0.27 level. Additionally, $2 million worth of positions at the $0.285 level supports the bearish scenario. The distribution of open positions suggests that bulls have lost control and that prices could decline further.
Low market participation may leave XLM vulnerable against technical levels. Particularly, high volatility in Bitcoin (BTC) 
$77,690 and macroeconomic uncertainties create additional pressure on altcoins. This scenario implies that breaking through Stellar’s short-term supports could trigger stop-loss orders from investors, accelerating the downward trend.
