• Francisco Hernandez

Monero (XMR) fights for higher high after 73% retracement

Introduction

Last month, Monero (XMR) was in the middle of a retracement from a yearly high of $91.17. The price hit as low as $26.32; a ~73% retracement from the high. The low hit on March 13th, 2020, just a couple days after COVID-19 was declared a world pandemic. Coincidence? Perhaps. This was also a time when governments around the world ordered lock downs or stay at home orders, effectively halting the world economy. What followed was record setting levels of unemployment and many closed businesses. Governments reacted to this by inflating the money supply. Could have Monero reacted to the governments decision to "stimulate" economies by flooding the system with cash? Maybe so or maybe not. Let's see what the charts say.

Yearly high and low.


Bollinger Bands

It's not surprising to see that Monero (XMR) broke right through the middle Bollinger Band (red) and then rode the lower BB (white) down to the low. There was a little bounce in price towards the middle BB, but it was rejected and continued downwards. Within the last two weeks, Monero bounced off the lower BB and broke through the middle BB. Price retraced testing the newfound support and has been rallying up towards the upper BB (white) for the last 3 days.

Bollinger Bands.


Moving Averages

I'll start by pointing out the 176-day moving average (MA; green). There are not enough days of data to use a 200-day MA, so instead I'll use the data that is available. The 176-day MA is that little green line above today's candle. The 50-day MA (orange) is approaching the 176-day MA, which is a death cross. The 50-day MA already made a death cross with the 100-day MA (yellow). This is typically interpreted as a sell signal; however, the best signal would have been when the 20-day MA crossed the 50-day MA back in the first week of March. These death cross signals are expected given the lag of the indicator. I am unsure how price will react to these death crosses given the recent rally. Perhaps Monero (XMR) will retest the newfound support at the 20 -day MA. Should prices continue to rise, Monero would face resistance at the MAs above, near $60. Given the death crosses, I am leaning toward a retest of the 20-day MA.

Moving averages.


Fibonacci Retracements

The Fibonacci retracements show similar support and resistance levels as the MAs. One at the 100% retracement level of $44.63 and the next above at the 78.6% retracement area of $55.87. Monero's (XMR) price is currently testing its rally high at $51.64. I expect price to remain within this area unless it breaks above or below one of the support areas.

Fibonacci retracements.


Volume

Volume has been steadily rising all year, making higher highs and higher lows. Right now, volume is at a lower low. This suggests that trading volume has slowed in the last month. However, Monero (XMR) currently has four consecutive green bars, indicating higher buy volume than sell volume. Perhaps it is signaling accumulation after the recent price retracement.

Volume.


On Balance Volume

The On Balance Volume (OBV) also shows a similar story, no surprise. Monero (XMR) saw selling pressure since the third week of February. This bottomed late March and has bounced up since. It has yet to make a higher high, but may be able to make a higher low if the OBV remains at this level. It is a good indication that the OBV is pointing upwards, indicating increased buying pressure (reflected in volume above). The OBV is bullish.

On Balance Volume.


Chaikin Money Flow

It is clear to see the downward trend Monero (XMR) recently experienced. The Chaikin Money Flow (CMF) shows that price was rising since the start of 2020 and peaked at late January. From there, the CMF moved horizontally in until the final peak in mid-February. From there the CMF dropped down past the zero line and made a lower low compared to the low of December 2019. The CMF has been rallying since and has broken above the zero line. Currently, the CMF is pointing upwards with a slight slant.

Chaikin Money Flow.


MACD

Like the CMF, the MACD is also showing bullish movement. The MACD line (blue) and the signal line (red) are parallel and pointing upwards. They are both below the zero line, but Monero (XMR) will cross that bridge when it gets there. The MACD line may approach the signal line and could potentially bounce off it, or cross over it. If it bounces, Monero could see continued upward movement. If it crosses, Monero will likely see a downward move.

MACD.

Chart with Bollinger Bands, moving averages, Fibonacci retracements.


Conclusion

Monero (XMR) has had a healthy ~93% rally from a new yearly low of $26.32 to the current price of $50.70. Monero is also in a good spot. It's not bad because Monero has the 20-day MA and the 100% Fibonacci level as support. The nearest resistance Monero faces is at the 78.6% Fibonacci level of $55.87. Following that, Monero faces resistance at the MAs above. Monero is currently trying to make a higher high from March 27th, 2020 at $51.64. Price will likely continue testing it, but the OBV, CMF, and MACD are all pointing bullish, so this suggests a move upward. Overall, Monero looks to be in a decent place. Although I'm leaning towards bullish, I will have to remain neutral on the chart and expect sideways movement for a week or so.

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