Monero [XMR]: Can bulls defend $163 support level as bears take over

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• XMR formed a descending channel pattern. 
• Investors were strongly bearish on XMR as Open Interest (OI) fluctuated. 

Monero’s [XMR] press time plunge was likely because of an increasing divergence in key technical indicators. XMR dropped by over 6% in the past seven days, as per Coingecko’s data.

Read Monero [XMR] Price Prediction 2023-24

At press time, its market was still weak as bears had more leverage. However, the asset was approaching a crucial support level. 

The $163.8 support level: Can it hold the drop?

Source: XMR/USDT on TradingView

The increasing RSI (Relative Strength Index) and volume divergence from mid-January signaled February’s price correction. The RSI and volume dropped while the XMR price surged, painting a bull trap ripe for a correction. So far, XMR has fallen from $186 towards the end of January to $165 at the time of writing. 

Monero could drop further and break below the crucial $163.8 support level. However, the drop could be checked by the $157 or $154 support levels. 

But bulls could attempt a recovery if the $163.8 support holds, invalidating the bearish bias described above. The rebound could target the upper boundary of the descending channel. However, traders can only make long entry positions if a break above and retest on the upper channel’s boundary is confirmed. Such an upswing would target the $180 zone. 

Nevertheless, the market weakened further, as shown by the dropping RSI and fluctuating volume (OBV). Therefore, bulls may have difficulty regaining control at the $163.8 level.

Investors were bearish on XMR as OI fluctuated

Source: Santiment

According to Santiment data, investors were strongly bearish on XMR, as shown by the negative sentiment. In addition, the demand for the asset in the derivatives market has been fluctuating, limiting its strong uptrend momentum in the past few days/weeks. 

If the fluctuation in demand continues, XMR could face an extended price correction and a devaluation below the $163.8 price level. 

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In addition, the open interest rate data by Coinglass further reinforces XMR fluctuations. More money moved from XMR’s futures market around mid-January. Afterwards, the OI fluctuated, undermining a strong uptrend momentum or recovery. 

Although the dropping OI momentum reduced at press time, a convincing price recovery could follow BTC’s bullish price action. Therefore, investors and traders should monitor the king coin price movements. 

Source: Coinglass