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Friday, December 2, 2022

Monero enters ‘overbought’ danger zone after XMR price gains 75% in two weeks

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Monero (XMR) price could witness a pointy pullback by June as a result of its 75% rally in the last two weeks has left the gauge nearly “overbought.”

Monero price RSI meets rising wedge

Downside dangers have been mounting as a result of XMR’s relative power index (RSI), which just about hit 70 this May 23, indicating that the market is taken into account overvalued. An oversold RSI might quantity to a bout of declining strikes, as a rule of technical evaluation.

Additionally, Monero can also be portray a bearish reversal sample, dubbed the rising wedge. Rising wedges form when the price moves inside a range defined by two ascending, converging trendlines.

As they do, the volumes typically decline, underscoring a lack of conviction among traders about the upside price move.

Rising wedges typically resolve after the price breaks below their lower trendline, followed by an extended move downside to the level that traders locate after adding the maximum wedge’s height to the breakdown point. 

XMR/USD four-hour price chart featuring RSI and rising wedge setup. Source: TradingView

As a result of this technical rule, XMR risks falling toward $138.50 by June—down nearly 30% from May 23’s price—if the breakdown point comes to be around $180. A breakdown move that appears near the apex point around $200 would shift the wedge’s downside target to nearly $150.

A slightly bullish XMR setup

Concurrent with the rising wedge, XMR has also been forming an ascending channel pattern, confirmed by at least two reactive highs and lows throughout the previous two weeks, as proven beneath.

XMR/USD four-hour price chart that includes ascending channel. Source: TradingView

XMR now trades in the center of its ascending channel vary, eyeing a detailed above $200, a traditionally vital assist stage, albeit performing as resistance. Meanwhile, the token holds its 200-4H exponential transferring common (200-4H EMA; the blue wave) close to $191 as its interim assist.

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If the price breaks above $200, it could invalidate the bearish reversal setup posed by the falling wedge sample mentioned above. XMR’s decisive bounce would shift its interim upside goal close to $220, up about 15% from May 23’s price.

Conversely, failing to shut above $200 would enhance XMR’s dangers of declining towards the $180–$175 vary, marked because the “pullback goal” in the chart above. The space coincides with the ascending channel’s decrease trendline.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Every funding and buying and selling transfer entails threat, it’s best to conduct your personal analysis when making a call.