Monero: Watch out for this key development before taking a position
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Monero has traded within the confines of a descending channel for over a week now. A broader market rally seems to have been the missing catalyst in the XMR market as the price attempted to break north of its upper trendline.
However, a few conditions have to be met first before a blowout can be expected. At the time of writing, XMR was trading at $306.16, up by 6% over the last 24 hours.
Monero 4-hour Chart
In order for a successful breakout, XMR needs to close above its 27 August swing high of $317. Next target levels can be found between $340-$344, representing 3-month highs for the digital asset. If sellers step in before $317 and trigger a sell-off, the price would continue to trade within the pattern.
A close below the 20-SMA (red) would also increase the chances of a newer low of $271, one from where the 200-SMA would be under the spotlight. A close below the long-term moving average line would transpire into steep losses.
The 24-hour trading volumes noted a jump of 23%, a hike that seems necessary if XMR wants to sustain its trajectory. It is important for the price to decisively close above $317 on the back of strong volumes as well for a successful breakout from the pattern. The RSI met with a breakout of its own as the index shot north from a descending wedge and pointed north from 60.
A reversal will be unlikely until the index hits the overbought zone. Meanwhile, the MACD and Squeeze Momentum Indicator presented strong buy signals. The MACD rose above the half-line after a bullish crossover while the SMI registered a series of green bars above its equilibrium.
Monero seemed to be shaping up for an 11% jump towards the resistance zone of $340-$344. Volumes were on the up and the indicators lined up a favorable narrative.
However, XMR needs to close above $317 to confirm this outcome. Hence, traders should wait for this key development before longing XMR.