Stellar (XLM) has been on a prolonged downtrend for nearly three months, and recent technical indicators suggest that the altcoin could face further challenges. With the price action approaching a critical Death Cross, the possibility of a recovery in the short term appears increasingly unlikely.

Death Cross Threatens XLM’s Short-Term Outlook

The primary concern for Stellar investors is the approaching Death Cross, a bearish technical signal that could indicate further declines for the altcoin. The Death Cross occurs when the 50-day Exponential Moving Average (EMA) crosses below the 200-day EMA, and it is often seen as a sign of weakening momentum. This potential crossover marks the second Death Cross for Stellar in 2025, following a similar pattern in April 2024.

The formation of this Death Cross would signal that sustained selling pressure could push the price lower, making it harder for XLM to break above key resistance levels. Currently, Stellar is struggling to stay above the $0.259 support level, and any move higher could be capped at $0.299 in the near term.

Chaikin Money Flow Indicates Growing Bearish Sentiment

In addition to the technical Death Cross, on-chain metrics also suggest a growing bearish sentiment around Stellar. The Chaikin Money Flow (CMF) indicator, which measures the buying and selling pressure of an asset, shows that outflows are dominating inflows. Currently, the CMF is well below the zero line, indicating that more money is leaving XLM than entering it. This outflow trend is a sign of growing bearish sentiment, and it could exacerbate the altcoin’s struggles to recover.

The declining CMF highlights a lack of confidence from investors, making it even more difficult for XLM to regain upward momentum. Without a significant influx of buying pressure, the altcoin may continue to face downward pressure in the days ahead.

XLM Price Trapped Below Key Resistance Levels

As of now, XLM is trading at $0.272, holding above its support level at $0.259. The altcoin has been stuck within a descending wedge for the past three months, which has prevented any meaningful breakout. With the looming Death Cross and overall bearish market sentiment, it seems unlikely that XLM will break out of this pattern in the near future.

If XLM fails to reclaim the $0.299 resistance level, it could face further declines. The next major support level lies at $0.259, and if this is broken, the price could test lower levels at $0.231 or even $0.200. Given the current market conditions, Stellar’s outlook remains firmly in bearish territory.

What Would It Take for XLM to Recover?

For Stellar to reverse its current downtrend, the price would need to break above the $0.299 level and push past the key resistance at $0.325. A successful breakout above $0.355 could signal the start of a reversal and allow the altcoin to move beyond the current downtrend. However, this would require a significant shift in market sentiment, as well as renewed investor confidence in XLM.

Until then, the technical indicators and market sentiment point toward further downside risk for Stellar in the short term. Without a significant change in momentum, XLM may continue to struggle, trapped below key resistance levels.

Conclusion: Bearish Sentiment Weighs on XLM

Stellar (XLM) is facing a challenging period, with key technical indicators signaling a potential continuation of the downtrend. The approaching Death Cross, along with bearish metrics like the Chaikin Money Flow, suggests that the altcoin may struggle to recover in the short term. Investors will need to watch for a breakout above $0.299 or a reversal of the current market sentiment for any potential recovery.

Until then, the path of least resistance for XLM seems to be downward, with further declines possible if the support at $0.259 is broken.