Stellar (XLM) Bull Flag Breakout Shows Cracks as Momentum Fades

Stellar (XLM) has had a strong July, rallying 77% this month. But in the last seven days, it’s given up nearly 10%, and the picture on the charts is looking less convincing.

On the two-day chart, XLM price initially broke out of a bull flag, a continuation pattern that usually signals another upward leg, yet the candles that followed have mostly turned red. Without new buying pressure, the breakout could already be faltering.

Net Flows: The Only Tailwind is Losing Strength

Exchange net flows have played a big role in XLM’s recent rally. Earlier this month, more coins were leaving exchanges than entering, reducing available supply and fueling upward momentum.

Stellar price and netflows: Coinglass

Over the past week, that trend has weakened noticeably, with net outflows sliding closer to neutral levels. The lack of sustained withdrawals hints that long-term holders aren’t adding fresh buying pressure anymore, leaving the breakout without much support.

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Weak Money Flow Adds to Concerns

Volume data on the two-day timeframe reinforces this fading momentum. On-Balance Volume (OBV), which tracks cumulative buying and selling pressure, has been drifting lower despite the XLM price breakout, showing that large buyers aren’t stepping in with conviction.

XLM and the On Balance Volume metric: TradingView

Similarly, the Chaikin Money Flow (CMF) has dropped sharply, falling from highs around 0.35 in early July to roughly 0.12 now. CMF gauges whether actual money is flowing in or out of an asset, and a slide like this indicates weakening demand.

Chaikin money flow indicator showing XLM price weakness: TradingView

Both metrics suggest that the bullish breakout may lack the capital backing needed to extend higher.

Stellar (XLM) Price Still Above Flag, but Invalidation Levels Are Clear

The XLM price is currently holding above the bull flag breakout line, trading near $0.41. However, momentum is fragile. A dip below $0.41 would put the Stellar (XLM) price back inside the pattern, and a break under $0.35 would erase almost half of the 133% rally that built the flagpole, effectively invalidating the breakout structure.

XLM price analysis: TradingView

For bulls to regain control, the XLM price needs a decisive move back above $0.47, backed by stronger inflows and renewed volume. Without that, the recent breakout risks becoming just another failed attempt to push toward new highs.