Monero manages to avoid the market rout, but the price of XMR is still at risk of falling by 20% by June.
This month, Monero is going to launch the testnet version of its hard fork, so the bearish setup for XMR comes at an opportune time.
Monero (XMR) has demonstrated a surprising resistance to the hawkish policies of the United States Federal Reserve, which drove down the prices of the majority of its cryptocurrency competitors, including the market leader Bitcoin (BTC), over the past week.
According to information provided by Binance, the price of XMR increased by 2.37% to finish the previous week at $217. Bitcoin, on the other hand, which is known to have an effect on the cryptocurrency market as a whole, finished the week with a loss of 11.55%. Ether (ETH), the second-largest cryptocurrency, also experienced a decline of 11% during the same time period.
While the value of the cryptocurrency market dropped by nearly 9%, or $163.25 billion, over the past week, the market cap of Monero increased by $87.7 million. This suggests that many traders decided to seek safety in this privacy-focused cryptocurrency.
XMR near critical support
Monero started the new week with a selloff, with XMR plunging by nearly 4% to around $208 on May 9.
The decline brought the token near its key support level — the 50-week exponential moving average (50-week EMA; the red wave in the chart below) near $214. The wave also coincides with another price floor — the 0.618 Fib line of the Fibonacci retracement graph drawn from the $38-swing low to the $491-swing low.
A selloff began for Monero at the beginning of the new week, sending XMR prices down by nearly 4% to around $208 on May 9th.
The decline brought the token close to its crucial support level, which is located near $214 and corresponds to the 50-week exponential moving average (50-week EMA; the red wave in the chart below). The wave also coincides with another price floor, which is the 0.618 Fib line of the Fibonacci retracement graph drawn from the $38 swing low to the $491 swing low. This line was drawn from the beginning of the wave to the end of the wave.
It is interesting to note that the drop in the price of XMR is a part of a pullback move that began on April 21 and started from approximately $290. In turn, a reversal to the downside manifested itself in the midst of a falling wedge breakout, the upside target of which was located somewhere around $490.
One of these two outcomes is possible as a consequence of that: XMR either breaks below its support confluence around $214 to test the wedge’s upper trendline as support, which also coincides with the token’s 200-week EMA near $161.50, or the token either rebounds from the support confluence and continues its move toward the wedge’s technical upside target near $490. Both of these outcomes would be considered bullish for the XMR price.
Strong XMR fundamentals
The general trend of the cryptocurrency market appears to be heading downwards, which is bearish in an environment with higher interest rates. This, in conjunction with Monero’s erratic but consistent positive correlation with Bitcoin, could eventually weigh XMR lower, resulting in a decline toward the wedge’s top around $160 in the second quarter, which would be a decrease of approximately 20% from the price at which it is currently trading.
Strong XMR fundamentals
The bearish setup for XMR could experience a period of price spikes as Monero moves closer to the tentative date of its hard fork, which is set for July 16.
According to a post on Monero’s GitHub, the release of a testnet version of the same technical upgrade is scheduled for the 16th of May. The team that is behind the project has confirmed that the hard fork will improve the network security of Monero while simultaneously lowering fees.
As a result of Monero’s promise to maintain users’ anonymity, it is anticipated that demand for the cryptocurrency will increase in 2022. For example, XMR has become popular among cybercriminals who use ransomware; a study conducted by CipherTrade forecasts a 500% increase in the usage of the token in the year 2021.
