Decoding Monero’s 43% slide – 2 zones to watch for XMR reversal

Monero [XMR] saw a heavy increase in trading volume in mid-January, when the altcoin reached a new all-time high at $799.89. Since then, XMR has retraced by 43.8%.

A recent AMBCrypto report highlighted that Monero was likely to pull back toward $520 and the $400-$440 region. This has come to pass, but now the privacy token was resting atop a key support.

Is longer-term XMR bias bullish or bearish now?

Monero has retraced a good chunk of the rally from August that took the privacy token to new all-time highs. The swing points chosen on the chart above were based on the impulse move upward on the weekly timeframe.

Zooming in on the daily timeframe, we can see that the swing structure remained unbroken. The retracement did see a bearish internal shift.

The CMF was also below -0.05, and the RSI has fallen below the neutral 50. XMR was trading below its 20 and 50-day moving averages. Together, the signs showed that further losses were possible.

Exploring the bearish scenario

With Bitcoin [BTC] facing selling pressure and Monero testing a key Fibonacci retracement level as support, things looked difficult for XMR bulls. The recent rally to ATHs had a classic, high-volume blow-off top.

A drop below the $411.5 level would confirm an indication trend on the 1-day timeframe. As things stand, the bullish argument for new all-time highs does not seem to hold water.

Traders’ call to action- Sell the bounce

After collecting the liquidity huddled up around $450-$480, XMR has bounced higher on the 26th of January. This bounce has the potential to target the magnetic zones to the north.

These liquidity pools were at $500-$510 and $560-$580. In the coming days, a price bounce to these levels is possible. Traders should watch out for a drop below $411.5 to confirm longer-term bearishness, or a bounce to magnetic zones for a reversal.

Final Thoughts

• The speed of the XMR rally and its cool-off suggested the run might be over, especially with the selling pressure on Bitcoin.
• A price bounce toward $560 would be for selling, unless Bitcoin manages to reclaim the $94.5k resistance and turn altcoin sentiment bullish.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.