Monero price confirmed a bullish reversal pattern as dip buyers capitalized on a recent drop. XMR now eyes a potential rally to as high as $420 over the coming weeks, as demand for privacy solutions is on the rise.

According to data from crypto.news, Monero (XMR) price rose nearly 9% to an intraday high of $344 on Tuesday, Feb. 17, while its market cap moved back above $6.3 billion.

Dip buyers took an interest in the token after it fell to a yearly low of $284 earlier this month. While it has retraced some of the losses, XMR still lies 57% below its yearly high of $788.50.

Now, on the daily chart, Monero price has confirmed a breakout from a falling wedge pattern, one of the most popular bullish reversal patterns formed by two converging and descending lines. Historically, a breakout from such patterns has been followed by days of consistent uptrend before losing momentum.

The technical breakout gains strength from a bullish MACD crossover and an RSI that is trending close to oversold levels.

Hence, the next key resistance level for Monero lies at $381, the 200-day EMA, which would serve as the final hurdle to validate a long-term trend reversal.

Breaking above this level could offer bulls the support needed to test the psychological resistance level at $420.  XMR price breakouts have stalled around this area in past market cycles.

Bullish catalysts for Monero

There are multiple catalysts that are driving the Monero rebound today and could continue to act as a tailwind in the days ahead.

First, investors seem to be rotating capital from other privacy-centric tokens such as Zcash (ZEC) and Dash (DASH) as they rebalance their portfolios. Zcash, for instance, has lost much of its investor appeal after its core development team resigned last month.

Second, Monero is also benefiting from a renewed demand for privacy tokens, especially as regulators across the globe are tightening oversight. New reporting standards across many jurisdictions now require platforms to share user identities and transaction histories with authorities, which has sparked concerns over the sector’s privacy ethos. 

At the same time, recent reports suggest XMR has become a popular means of payment across darknet marketplaces, where large-scale transactions are creating an additional source of demand.