MONERO Analysis – XMR

This week started with new monthly lows in $BTC and $ETH that falsified the support zone in both cases, but that same day left a bullish rejection move that leaves us a range between $39k and $43k in the case of $BTC and between $2.9k and $3.2k in the case of $ETH.

This movement in a lateral range causes a decrease in market volatility, as we can see in the CVI (Crypto Volatility Index) chart, which has not been reached since October 2020.

These volatility lows leave us in a situation in which we will have to be very attentive to possible sharp movements, in the event of a bullish reversal from the volatility support zone.

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This week I would like to highlight the result of XMR, the Monero token has been in the green for two months, generating an increase of +56% since the beginning of March and +25% so far in April.

The main goal of Monero is privacy in transactions. Unlike the vast majority of cryptocurrencies that have transparent blockchains, XMR is designed to preserve the anonymity of senders and recipients through the use of advanced cryptography, prioritizing privacy and security.

Unlike other privacy tokens like ZCASH, which we reviewed in March, XMR by default hides transaction details, both senders and recipients, as well as the number of tokens being transferred.

The Monero network uses a consensus mechanism called CryptoNight, which is based on proof of work. This prevents large mining operations from becoming a dominant force, to maintain decentralization.

If we analyze the evolution of the price of XMR, we can see how despite maintaining a long-term bullish trend, it had generated a reversal movement from its ATH close to $500, which traced a downward trend since May 2021.

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During the month of February we saw a Double Top form, a trend reversal technical figure which has caused this +56% price increase in the last two months.

This leaves us with a scenario where we have seen the price break above the downtrend line, but have failed to make a higher high than before, leaving resistance zones at $290 and $340. This resistance at $340 is key, if the price manages to break it, it would generate that maximum higher than the previous one that would trigger the activation of the uptrend.

But due to its current situation, if we look at the RSI, we see how it has failed to confirm the breakout of 70, creating a double peak that can lead the price to pull back to the trend line, where the strongest support zone  stands at $130, although there is also a confluence zone in the $180-$200 range, which could serve as support in the coming weeks.

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If we expand the image to 4h candles, we can see the formation of a bullish channel. Bullish channels tend to break down, but they usually occur in uptrends, so one option to consider would be the possibility of breaking out of this channel, which would cause a pullback to the aforementioned support areas.

Finally, remember that nothing discussed in our articles can be considered as investment advice. Everyone must do their own analysis and develop their own trading strategy. The Belobaba Crypto Fund team only shows our analytical view of the market.