• Francisco Hernandez

Monero (XMR) drops 30% from 2020 high. Is the down trend over?!

XMR-USD, 1D, BTSE


Review

Since my previous article, Monero (XMR) has made a 48.37% increase to a high of $97.17. This was in line with the TA I did at that time. To quickly review, Monero did not meet the criteria I had set. I wanted price to close above the upper Bollinger Band (BB) and/or the previous high of $69.14. Price did not break past the upper BB and while the wick did break above the previous high, it ultimately closed lower at $68.62. Then the retracement followed. Price held at the previously plotted 50% Fibonacci support level ~$56.68. From there price rallied up to the high mentioned previously, breaking right through all my previously set criteria. However, since that, Monero has made quite the retracement.

Percent gain from January 16th, 2020 to high, retracement, and percent gain to current price.


Introduction

Monero (XMR) followed suit with Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), which all rallied and then retraced. Monero made it's high, which failed to break past the upper Bollinger Band (white). This was an indication that momentum was slowing. Price dropped down to the 10-day exponential moving average (EMA), held for a day and then broke down to the 20-day moving average (MA). Price held around the 20-day MA and broke, leading to a farther retracement down to the 38.2% Fibonacci support level. Price rallied from there, hit the 23.6% Fibonacci resistance level and retraced right through the 38.2% Fibonacci support level, the 50-day MA, and the 50% Fibonacci support level. Currently, price is just under this Fibonacci level (i.e., $70.69). Monero is currently still in a downtrend.

Exponential Moving Average, Moving Averages, Bollinger Band, and Fibonacci levels.


Supports and Resistance


Fibonacci levels

Fibonacci levels suggest there is potential support around the 50% retracement area of $70.69 (green). However, this depends on today's candle. Should price close above this level, it can begin to act as support. This could then lead Monero (XMR) up towards the 38.2% resistance level of $76.94 (yellow). Should price close below the 50% area, it could act as resistance. I would continue to watch this price level today and in the coming days to see how it plays out. Should price close below it, the following Fibonacci support level would be the 61.8% retracement area of $64.45 (blue). Also, notice how the downtrend appears to have created a channel. Currently, price is at the bottom of the channel. Perhaps a rally towards the upper end of the channel is in store.

Fibonacci retracements and price channel.


Bollinger Bands

As mentioned in the beginning, Monero (XMR) had been riding the upper Bollinger Band (BB) and failed to break past it, leading to a retracement. Now, price is in the lower BB. Price could continue to ride the lower band, however the current candle is starting to form into a hammer. This could be an indication that a rally may be in store. If so, a target price may be near the upper end of the price channel or the 20-day MA (red; aka middle BB). On a side note, when prices reach these lower levels of the BB's, which is 2 standard deviations away from the 20-day MA, it means price has made a significant retracement. Personally, I like to use these areas as dollar-cost-averaging buy signals.


Bollinger bands.



Moving Averages and Exponential Moving Average


Monero (XMR) has broken past every MA and EMA except the 100-day MA, which can be expected to act as support. Given that Monero is in a down trend, I would not be surprised if prices reach the 100-day MA around $62.36. Price might continue to move within the channel, rallying up and down until it reaches the 100-day MA. However, I will again mention how the candle is starting to form into a hammer. This could indicate a rally up. Let's go on to the indicators below.

Moving Averages and Exponential Moving Average


Indicators


MACD

The MACD line (blue) is approaching the zero line and is nearly touching it. Should the MACD line cross the zero line and stay below it for a couple days, I expect prices to retrace even more. Given the current candle is looking like a hammer, the MACD line could potentially bounce off the zero line. Overall, the MACD is looking bearish.

MACD.

Chaikin Money Flow (CMF)

The CMF is showing some divergence with the MACD, indicating potential for a rally upwards. Taking this in consideration with the hammer-ish candle, I am becoming more convinced that Monero (XMR) could be looking at a rally in the next few days. Additionally, the CMF is above the zero line and is pointing upwards (divergence). However, the CMF has been making a series of lower lows. I would like to the CMF continue to pointing upwards and break past February 24th's peak.

Chaikin Money Flow.


On Balance Volume (OBV)

The OBV is also showing divergence with the MACD. Like the CMF, the OBV is also pointing upwards. Again, this makes me suspect a rally coming. Additionally, the OBV has been making a series of higher lows, although it has not been making higher highs.

On Balance Volume.


Conclusion

Summary chart.


Taking everything into account, I suspect Monero (XMR) has a small rally coming. First, the current candle is looking hammer-ish (i.e., the lower wick should be longer). And, second, there is bullish divergence with the OBV + CMF and the MACD. However, I do not think this would signify the end of the current downtrend, but I do expect price to at least reach the upper end of the price channel (red diagonal lines) or even up to the 20-day MA (aka middle BB). For me to think the down trend is over, I would like to see price close above the peak of$85.45 from February 23rd, 2020 and hold there for a few days. Then I would like to see price break past the high of $97.17 from February 15th, 2020. Overall, Monero is in a downtrend with prices falling within a channel. Price faces support at the 100-day MA. Should this area hold, Monero could see sideways movement in the coming days. Should it break, there could be a full retracement in price since my last article (i.e., $65.49) and perhaps farther down into the high $50's.

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