Monero (XMR) has shown a surprising resilience against the United States Federal Reserve’s hawkish policies that pushed the prices of most of its crypto rivals — including the top dog Bitcoin (BTC) — lower last week.
XMR price closed the previous week 2.37% higher at $217, data from Binance shows. In comparison, BTC, which typically influences the broader crypto market, finished the week down 11.55%. The second-largest crypto, Ether (ETH), also plunged 11% in the same period.
While the crypto market wiped off $163.25 billion from its valuation last week, down nearly 9%, Monero’s market cap increased by $87.7 million, suggesting that many traders decided to seek safety in this privacy-focused coin.
XMR near critical support
Monero started the new week with a selloff, with XMR plunging by nearly 4% to around $208 on May 9.
The decline brought the token near its key support level — the 50-week exponential moving average (50-week EMA; the red wave in the chart below) near $214. The wave also coincides with another price floor — the 0.618 Fib line of the Fibonacci retracement graph drawn from the $38-swing low to the $491-swing low.
Interestingly, the XMR price drop is part of a pullback move that began on April 21 from about $290. In turn, the reversal to the downside surfaced amid a falling wedge breakout whose upside target comes to be around $490.
That could result in either of these two outcomes: XMR breaks below its support confluence around $214 to test the wedge’s upper trendline as support, which also coincides with the token’s 200-week EMA near $161.50, or the token rebounds from the support confluence and continues its move toward the wedge’s technical upside target near $490.
The overall crypto market trend looks biased toward bears in a higher interest rate environment. This, coupled with Monero’s erratic but consistent positive correlation with Bitcoin, could eventually weigh XMR lower, resulting in a decline toward the wedge’s top around $160 in Q2, down about 20% from today’s price.
Strong XMR fundamentals
XMR’s bearish setup could see a period of price spikes as Monero inches closer to its tentative hard fork, scheduled for July 16.
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A testnet version of the same technical upgrade expects to come out on May 16, according to Monero’s GitHub post. The team behind the project has confirmed that the hard fork would improve Monero’s network security while cutting fees.
Meanwhile, demand for Monero expects to rise higher in 2022 due to its promise of providing anonymity. For instance, XMR emerged as a choice of crypto among ransomware attackers, with a CipherTrade study showing a 500% increase in the token’s usage in 2021.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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