• XMR reached an intraday high of $138.50, a level not seen since September 2018.
  • XMR has flashed the sell signal in its 12-hour chart, prompting a short-term correction.

Monero is currently in the middle of a bullish rally and has reached its highest levels since early September 2018. Since September 3, 2020, the leading privacy coin has jumped by 73% from $77 to $133. The network is currently prepping for a major network upgrade that will take place on October 17.

Analysts have also argued that the positive pierce action over the last two days may have come in response to the U.S. Department of Justice (DOJ), instructing companies to install encryption backdoors. The DOJ’s statement reads:

We call on technology companies to work with governments to take the following steps, focused on reasonable, technically feasible solutions: Embed the safety of the public in system designs… Enable law enforcement access to content in a readable and usable format where an authorization is lawfully issued… Engage in consultation with governments and other stakeholders to facilitate legal access.

It’s not possible to have such a backdoor installed in Monero’s protocol without everybody noticing. As such, the analysts claim that this may have triggered XMR to jump from $116 to a high of $138.50 over the last 48 hours.

The technical picture

XMR is presently trending in an ascending channel formation. As previously mentioned, XMR reached an intraday high of $138.50 this Monday, a level not seen since September 2018. The MACD shows increasing bullish momentum, which the buyers will want to take advantage of to break above the $140 resistance level.

XMR/USD daily chart

XMR/USD daily chart

If the buyers do manage to break past this level, the price should reach the $160 resistance.

The flipside: Is a bearish correction imminent?

Looking into the 12-hour time frame, there are a couple of indicators that show that the price may go through a short-term bearish correction before continuing its upward swing. The first thing to note is that the relative strength index is hovering above 70, meaning that the privacy coin is currently overpriced. 

XMR/USD 12-hour chart

XMR/USD 12-hour chart

The second thing to note is that the TD sequential indicator has flashed the sell signal. Both these indicators should prompt the sellers to correct the price. The downside is currently capped off at the $120 support line. If the bears manage to break past this level, the next viable support lies at the lower bound of the parallel channel (~$112). If the bears manage to break past this level, it could be pretty catastrophic as the next healthy support lies at the 50-bar SMA  ($102). Analyzing the social media behavior over the last 24 hours surrounding the privacy asset also gives more fuel to this short-term bearish hypothesis.

XMR social volume

fxsoriginal

High social notoriety isn’t usually a good sign for a digital asset. If social media volume increases when a cryptocurrency “pumps,” it’s usually a sign of people quickly joining in on the action because of FUD. This is why a spike in social volume inevitably leads to a price correction. As can be seen, there is a significant spike on October 12, which hints at a short-term drop in price.

Key price levels to watch

XMR bulls will want to continue their uptrend by breaking past the $140 resistance line. If the buyers do manage to do so, they will next aim for the $160 resistance level. Technical analysis shows that XMR may go through a short-term price correction before continuing its upswing. In this case, the downside is capped at the $120 support line.


 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

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