Monero (XMR/USD) has been quietly making bullish moves in the last few weeks. It recently took out resistance of $104 on November 2, 2018. This triggered the breakout from the symmetrical triangle pattern on the 4-hour chart. The breakout attracted traders who were waiting on the sidelines. This sparked a rally to $113.50 on November 7.
At that point, Monero started to sputter. It created a bearish divergence on the 4H RSI. On top of that, the market tried to stay above $113 numerous times but it failed. These were indications that Monero has hit a short-term resistance and was ripe for profit-taking. Thus, the market succumbed to selling pressure on November 8. It has been pulling back since but this gives us a chance to buy the breakout.
Technical analysis shows that Monero is looking to retest breakout of $104. We believe bulls will successfully complete the retest and flip the resistance into support for the following reasons.
First, at a price level of $104 Monero has a solid base of buyers. Bulls have been accumulating at these levels since August 27. Even if the market went below the support several times, bulls always managed to take back that level.
In addition, the 4H RSI appears to be respecting the support of the ascending channel. Bulls have the upper hand in terms of momentum as long as the support holds.
Lastly, volume has been steadily declining since November 4. If bears have any chance of breaching $104, they’ll need heavy volume; the kind that overwhelms demand in this area.
The strategy is to buy the dip as close to $104 as possible. If Monero successfully completes the retest, it will likely to launch a rally to our targets of $120 first and then $140.