Stellar (XLM), the Ripple rival, has reached a pivotal level in its price action, making it a coin to watch closely. After experiencing a sharp 38% drop in price recently, XLM has started to show signs of recovery. However, the next few days will be critical in determining whether it can sustain this momentum or if it will face another downturn.

XLM’s Key Price Levels

The most important technical level for XLM currently is $0.35. According to analysts, if XLM manages to close a daily or four-hour candle above this price point, the coin could be primed for a significant rally. A successful breakout above this resistance could push the price as high as $0.43, representing a potential 22% increase from its current trading level of around $0.346.

However, if XLM fails to breach the $0.35 resistance, it could see a sharp decline. In such a case, the next significant support level is around $0.30, a drop of approximately 10%.

Key Indicators Pointing to Potential Breakout

Despite its recent price struggles, XLM is still trading above the 200 Exponential Moving Average (EMA) on the daily chart, which indicates a general uptrend. This long-term indicator suggests that while the token may be facing some short-term volatility, it has the potential for future gains if it maintains its position above the EMA.

The last two days have shown promising price action, with XLM gaining more than 3.5% over the past 24 hours. However, this has not been enough to fuel a major surge in trading volume, which has dropped by 4% during the same period. While the price movement has been positive, investor participation remains low due to the uncertain market conditions.

Growing Trader Interest in XLM

One promising sign for XLM is the increase in open interest, which has surged by 9% in the past 24 hours. This indicates that traders are showing growing interest in the asset, potentially signaling that new positions are being established ahead of a potential breakout. The surge in open interest suggests that market participants believe XLM may be poised for a strong move, whether up or down.

On-Chain Data Signals Caution

However, despite the rising open interest, on-chain data paints a mixed picture. Over the past 48 hours, exchanges have seen a $4 million outflow of XLM tokens, as reported by Coinglass. This outflow suggests that some investors are choosing to sell off their holdings, possibly in anticipation of a price drop. The combination of increased whale activity and token outflows suggests that while some investors are optimistic, others are hedging against potential losses.

Conclusion: A Critical Moment for XLM

Stellar (XLM) is at a critical juncture, and the next few days will determine its path forward. If it successfully breaks above the $0.35 level and maintains momentum, the asset could be poised for a strong rally toward $0.43. However, failure to do so could lead to a decline toward the $0.30 mark, further confirming the uncertain outlook for the asset.

Traders and investors will need to keep a close eye on key indicators like the 200 EMA, open interest, and market sentiment to determine whether XLM can break through resistance or faces further declines. As the market continues to shift, Stellar’s future remains in a delicate balance, with both bullish and bearish forces at play.