Monero could retrace by more than 20% over the next few days.
A sustained close below $191 should validate the bearish thesis.
XMR will likely need to claim $207 as support to be able to advance further.
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Monero has rallied over the past week. However, further gains could be limited as several technical indicators are pointing to a significant pullback ahead.
Monero Could Take a Nosedive
Monero looks primed for a steep correction after outperforming most cryptocurrencies in the market.
Demand for the privacy network’s XMR token appears to have risen following Terra’s UST and LUNA collapse. XMR has surged by more than 75% since May 12, while Bitcoin and many other assets continue to struggle. Now, it appears that XMR has reached overbought territory with a potential retracement ahead.
XMR’s price action appears to have led to the formation of a rising wedge on its four-hour chart. This technical pattern is typically seen in bear markets and, accompanied by low trading volumes, can signal the continuation of a downtrend. A decisive four-hour candlestick close below $191 could validate the pessimistic outlook.
Slicing through this crucial area of support may encourage traders to exit their positions, accelerating the downward pressure behind Monero. A spike in sell orders could lead to a breach of the $188 demand zone, which would likely be followed by a 20% correction toward $152 or even $140.
Although the odds appear to favor the bears, Monero could invalidate the pessimistic outlook by overcoming the $207 resistance barrier. A sustained four-hour candlestick close above this supply zone could encourage traders to increase their positions, potentially helping XMR advance toward the $232 level.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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