Monero [XMR] registered a slight dip of 4.09% over the weekend. Measured from Friday’s high of $419.4, this dip originated around the key resistance of $418 – A level that has been in play over the past six weeks now.
Last week, AMBCrypto pointed out that the $420 and $450 price levels would be the likely bullish targets for XMR. This move was expected after the retest of the $360-area as support. This prediction has since come to pass.
With Monero facing pushback from the first magnetic zone at $420, should traders expect the rally to continue, or a price dip back towards $360?
Is Monero’s bearish divergence a concern?
The weekly chart revealed a bullish swing structure. The dip below $367, the 50% retracement level, was defended, resulting in previous week’s bounce to $419. The RSI also hinted at bullish momentum with a reading of 59.
While the structure and momentum seemed to favor the bulls, the OBV disagreed. The volume indicator showed a bearish divergence with the price action of the past 7 months. The OBV’s lower highs suggested that Monero may be rallying on the back of weakening demand – An unsustainable trend.
On the 4-hour chart, the structure was still bullish, but the technical indicators had begun to turn. The RSI dropped below neutral 50 to signal a bearish momentum shift. The OBV also fell below the previous week’s low, highlighting a hike in selling pressure.
Hence, it appeared likely that the $395-level would be tested next as support. Can bulls hold on though?
The bullish case
Since the structure on the 4-hour chart was bullish, a recovery might be possible. A dip to the psychological $400-level, followed by a Bitcoin [BTC] rally back above $90k, could bolster short-term confidence.
Traders’ call to action- Take profits on long positions
Traders already in long positions can look to take profits. The rejection at $420 confirmed the lack of bullish strength to rally to $450. Such a rally would have set the conditions for a sustained uptrend, but it was not to be.
The evidence at hand showed that a drop below $400 is likely next. However, it is unclear how deep it would go. For now, the clear support levels would be $395, $380, and the $360 demand zone.
Traders can wait for Bitcoin to climb back above $94k before looking to go long.
Final Thoughts
- XMR’s OBV made new lows across the selected timeframes, highlighting a distinct lack of buying pressure.
- Even if $400 is defended on Monday, traders should be wary of going long too soon. A Bitcoin short-term rally is necessary to boost altcoin confidence.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
