by Jamie Holmes
Monero (XMR) has burst onto mainstream news outlets recently as the CryptoNote protocol competes directly with Bitcoin, gaining acceptance from two large darknet markets and garnering a lot of attention as a consequence. Not only are speculators and darknet markets getting in on monero but also miners, with Google Trends indicating the strongest ever interest in monero mining this week.
After swinging from $3.70 to a high of $10.79, the market is now retracing, trying to find support at the Fibonacci retracements at $7.25 or $6.41. After five days of continuous selling, XMR will look to establish a fractal support before heading back up towards $10.79. The chart below shows the daily price action for XMR-USD on the Poloniex exchange.
Falling volume suggests we should be on the lookout for any change in momentum and could signal that the market is ‘squatting’ before making a jump higher. The chart below shows the Fibonacci extension and support levels for XMR-USD. It is anticipated that XMR-USD will extend as high as $15.18 if the market manges to bounce from either $7.24 or $6.41.
The chart below also shows the daily outlook along with the Ichimoku indicator. Notice that the conversion line and base line are nicely aligned with the 50 percent and 38.2 percent retracement levels shown in the previous diagram, signalling we can be fairly confident these zones will see strong buying interest for monero.
The price action is above the Ichimoku cloud suggesting we should look to buy as the market is in a long-term uptrend. Notice on Wednesday, the market tested support provided by the 50 percent Fibonacci retracement and the conversion line but was pushed back above the $8 handle.
Therefore, as long as today’s price action remains above $7.249999, a fractal support will be formed at this level and we should see renewed upward momentum. The chart below also displays a bullish ‘Maribozu’ candlestick pattern, indicating buyers are still in control of the market.
The midpoint of this candlestick at $7.37 will also serve as an important support, as well as $5.26, which are suggested as optimal entries into long positions in XMR-USD. However, it seems more likely that $7.37 will be tested, followed by another upward move for XMR-USD.
This week has also seen monero surge to the highest interest levels ever as indicated by Google Trends, shown below. The term ‘monero mining’ has also peaked this week, suggesting public involvement in the cryptocurrency is growing, not just for speculative purposes either.
Data source: Google Trends (www.google.com/trends)
This echoes the spike in public interest in bitcoin after Silk Road was made known to the internet via Gawker’s article on June 1, 2011. Bitcoin’s price surged from around $9.00 to a high of $29.58 on June 9, 2011; Mt. Gox was hacked shortly afterward, contributing to a steep decline thereafter.
Adoption by darknet markets such as Silk Road are likely to have been the main factor pushing the price of bitcoin into double digits in US Dollar terms, something that monero has repeated but in a shorter time period.
Moreover, looking at the demand and supply for XMR against bitcoin across the major exchanges, we see that buy and sell orders are almost evenly matched. Buy orders slightly outweigh sell orders according to Newbium, suggesting strong buying interest and that XMR will likely appreciate against bitcoin. With demand outstripping supply, XMR looks set for another rise.
Taking into consideration all of these factors, as well as the novel protocol upon which monero is based, the market should realize a higher price for monero in the long run.
After stubbornly rejecting advances below $8.00 over the past few days, monero will now look to establish more gains in the days ahead. Considering the strong demand for the cryptocurrency, the increasing public interest and bullish technical factors, our target for XMR to reach $15.18 is certainly achieveable.