Stellar’s XLM token surged 15% in a single session to hit $0.22, catching the attention of traders who now see the setup for a possible short squeeze. The move came as the MACD indicator flattened and open interest in XLM futures dropped 16.57%, a combination that often precedes a sharp upward move when short sellers are caught off guard.
What the indicators show
The MACD, a momentum oscillator that tracks the relationship between two moving averages, has gone flat. That signals a loss of directional momentum in the recent trend, but it also leaves the door open for a sudden reversal if buying pressure builds. The drop in open interest — the number of outstanding futures contracts — suggests that traders are closing out positions rather than adding new ones. When open interest falls during a price rise, it can indicate that short sellers are covering, which fuels further gains.
The key level to watch
For XLM to extend the rally, it needs to close above $0.245. That level has acted as resistance in the past, and a sustained break above it would confirm that the upward move has legs. If the token fails to clear that mark, the bounce could fizzle, and prices might retreat toward recent lows.
What could trigger a squeeze
The price action — a sharp single-session gain on declining open interest — is the classic footprint of a short squeeze. Short sellers who bet against XLM are forced to buy back tokens to cover their positions, which accelerates the rally. The question now is whether enough short interest remains to push the price through $0.245. Without a catalyst, the squeeze may run out of steam before hitting that threshold.
What’s next for XLM traders
Traders are watching the next few sessions closely. A close above $0.245 could open the path toward higher levels, while a rejection would likely send XLM back toward support near $0.20. The lack of a clear catalyst means price action alone will decide the near-term direction.
