Monero (XMR) price has dropped more than 10% after establishing a weekly high of around $290 on April 24. However, several technical indicators suggest that XMR/USD is poised to move forward. its uptrend in the near future.
Breakout of falling wedge pattern
Notably, XMR broke out above the “falling wedge” pattern at the end of March. It has continued to rise with increasing volume in the following trading sessions. This shows that the sentiment of Monero traders is positive.
Traditionally analysts consider a falling wedge to be a bullish reversal pattern, which often leads to a strong bounce.
The breakout target of the falling wedge is found by projecting the maximum distance between the lower and upper trendlines of the pattern on the breakout point.
In the case of XMR, the gap is around $250. Meanwhile, the breakout of the structure is around $210. Hence, a potential upside target for XMR is near $470, up over 75% compared to the current price.
However, XMR needs to close above the psychological resistance at $300 to confirm a move towards the target of the falling wedge pattern.
Monero’s upcoming hard fork
The bullish outlook for XMR also comes as its major hard fork approaches.
Monero will launch the testnet in May before undergoing a protocol upgrade expected in July. The update aims to increase the round size from 11 to 16 to ensure that XMR transactions have a set greater anonymity and more difficulty finding the source of the transaction.
The announcement of the hard fork has come amid growing demand for privacy coins amid uncertain geopolitical and economic situations.
Short-term correction risk
XMR’s strong fundamentals underpinned the price drive to higher highs. However, Monero also risks a short-term pullback.
XMR has been rejected by the $278 zone for the past three days, increasing the possibility that it could continue to drop lower. If the price continues to decline, the first target will be at $227, which coincides with the 0.236 Fib retracement level, drawn from the $493 high to $145 low.
Conversely, a decisive move above $278 can help XMR retest $320, the 0.5 Fib level of the same movement.