Assessing if Stellar [XLM] can see a 20% breakout, based on…

XLM’s breakout potential hinges on short liquidations and rising Open Interest as support holds.

XLM formed a descending triangle, signaling a potential 20% price breakout. Rising short liquidations and increasing Open Interest pointed to possible upward momentum.

Stellar [XLM] has been consolidating within a descending triangle, suggesting a significant price move is imminent. This formation typically signals that the price could either break out or break down. 

At the time of writing, Stellar’s price was $0.2786, reflecting a modest increase of 0.11%. With market sentiment still uncertain, traders are watching closely to see whether XLM will hold its support or continue to decline.

XLM’s current chart setup shows a descending triangle, a formation often associated with continuation patterns or breakouts.

The Relative Strength Index (RSI) sat at 39.61, indicating that Stellar was neither overbought nor oversold. This neutral reading suggested that a significant price move could be on the horizon. 

Additionally, the Bollinger Bands were tightening around the price, signaling that volatility may increase soon. Therefore, a breakout could occur, but traders must wait for confirmation on the price’s next direction.

Source: TradingView

How Stellar’s social metrics affected market sentiment

XLM’s social metrics are relatively low, with a Social Volume of just 15 and Social Dominance of 0.33%. These numbers suggest that Stellar has little social engagement at the moment, pointing to weak market sentiment. 

The low social activity may reflect a lack of conviction among traders, contributing to the current price consolidation.

However, this could also mean that when a breakout does happen, it could be more volatile, as less market attention may lead to faster price shifts. 

Source: Santiment

What does XLM’s liquidation data reveal about the market?

XLM’s liquidation data reveals a notable trend in long vs. short positions. At the time of writing, $12.24K in short positions have been liquidated, compared to 8.6K long positions.

This indicates that traders who bet against XLM are getting squeezed, which creates upward pressure on the price. 

Conversely, long positions have not seen the same level of liquidation, suggesting that buyers are holding their positions in anticipation of a breakout.

Therefore, if the squeeze on shorts continues, it could lead to a sharp price increase as these positions are unwound.

Source: Coinglass

Open Interest impact on XLM’s price action

XLM’s Open Interest has increased by 3.54%, reaching $116.89 million. This rise indicated that more traders were entering positions, anticipating an imminent price move.

The increase in Open Interest suggests growing participation, which could lead to increased market volatility. 

Should a breakout occur, this increase in Open Interest could amplify the price movement, either to the upside or downside, depending on the prevailing market trend.

Therefore, traders must monitor Open Interest closely to gauge the strength of the breakout.

Source: Coinglass

Conclusion

XLM’s technical indicators and liquidation data pointed to an imminent price move, but the direction remained uncertain.

The descending triangle suggested a potential 20% price shift, with low social metrics reflecting weak sentiment. 

However, the rise in Open Interest and the short squeeze indicate that there is growing market participation, which could amplify any price movement.

If support holds, XLM could see an upward breakout, driven by the liquidations of short positions. 

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