Fear index at 18: Monero bulls hold on, but confidence is fragile

On the 31st of January, Monero [XMR] prices advanced to $500.87, up 8.72% from the day’s trading open.

This move was cut short when Bitcoin [BTC] faced another wave of selling, sending it below the $80k psychological level.

At the time of writing, XMR was nearly back at the $450 support level.

An AMBCrypto report earlier this month had noted that the rally to new all-time highs and a swift retracement looked like a blow-off top, especially with Bitcoin also facing sell pressure.

In particular, the $500-$510 and $560-$580 liquidity pockets were highlighted as places where a bearish reversal could ensue. The $500 pocket has indeed rejected the Monero bulls’ attempt at recovery.

Where to next for Monero?

The market sentiment was deeply fearful, with a Fear and Greed reading of just 18. Bitcoin was approaching its weekly swing low at $74k, a critical support level.

If breached, it would be almost certain that a bear market is upon us.

Source: XMR/USD on TradingView

The MFI showed bearish momentum and capital flow for Monero. The relatively high trading volume during the price drop from the ATHs saw the A/D indicator fall to new lows, underlining severe selling pressure.

XMR still has a bullish swing structure on the daily chart. It continued to defend the 61.8% retracement level despite the market-wide volatility, which was a positive sign.

This is why short-selling the privacy token now is quite risky.

Balancing the two forces

Monero was in an odd position for swing traders. It does not present an obvious buy or sell signal. Investors can wait for a price drop to $415 and $352 before assessing whether they should buy.

If Bitcoin falls below $74k, buying Monero would become much more risky. At the same time, the bulls’ defense of the 61.8% retracement level showed resilience.

Traders’ call to action – Wait

Source: CoinGlass

The 1-month liquidation heatmap illustrated why the price action was not in a favorable place for either bulls or bears. The nearby liquidity clusters were at $400-$415 and at $500.

Traders can wait for a sweep of either of these zones before entering a trade, expecting a rapid move toward the opposing magnetic zone.

If BTC loses $74k, be extra wary of going long on any altcoin.

Final Thoughts

• The Monero price action’s swing structure on the 1-day timeframe remained bullish despite the volatility it experienced in January.
• The liquidation heatmap highlighted the two key zones nearby where an XMR short-term reversal could occur.

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