Monero [XMR] had a parabolic rally in January, and just as it set a new all-time high at $798, Bitcoin [BTC] ran out of bullish momentum. The subsequent BTC sell-off led to a steep XMR correction of 63.7% in just 22 days.
The social media engagement on the privacy coin was remarkable, but AMBCrypto pointed out that this was a sign of “obvious crowd FOMO” and highlighted overheating alarms that the spot volume bubble map showed.
These warnings were followed by a steep correction just days later. The failure to defend the long-term trendline support meant that XMR was likely headed to $266 next. On Friday, the 6th of February, XMR reached a low of $276.
Monero bears reclaim key retracement levels
Source: XMR/USDT on TradingView
The A/D indicator made new multi-month lows to underline the depth of the selling pressure in the past three weeks. The steep correction and high volume explained the A/D indicator’s movement and showed that recovery was highly unlikely anytime soon.
The 20 and 50-day moving averages formed a bearish crossover after 4 months of a bullish trend. The DMI also signaled a strong downtrend in progress.
These were pretty obvious just looking at the recent drawdown. The bulls’ last spark of hope lay at $352, the 78.6% Fibonacci retracement level from the rally between $230 and $799.
Levels that once acted as support a few weeks ago have now flipped into firm supply zones. Selling pressure proved so strong that the $352 retest failed to produce any meaningful reaction.
What should traders expect?
Traders and investors should be prepared for the downtrend to continue.
It is possible that Monero would halt at certain price levels and form a range at moments when Bitcoin [BTC] and major altcoins see a price bounce in their longer-term downtrends.
XMR faces bearish retest zones
Source: CoinGlass
The run is clearly over. A Bitcoin bounce could take XMR higher. The liquidation heatmap showed that the $390-$420 and $500 levels were the next magnetic zones to watch. A retest of these areas could yield another bearish move.
Final Thoughts
- Monero has had its parabolic rally and subsequent blow-off top, and has retraced 63% in just over three weeks.
- Swing traders and investors would have to be a special kind of brave to buy here, but their portfolios might not thank them for it. Catching knives can be exciting, but also needlessly risky.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
Source: https://ambcrypto.com/monero-goes-from-fomo-to-63-freefall-whats-next-for-xmr/
