Monero enters the “overbought” danger zone after XMR gains 75% in two weeks

Monero enters the “overbought” danger zone after XMR gains 75% in two weeks

Monero (XMR) price may witness a sharp pullback in June because its 75% rally over the last two weeks has left the indicator almost “overbought”.

Monero Price RSI Encounters a Rising Wedge

Downside risks have been rising due to XMR’s Relative Strength Index (RSI), which almost hit 70 on May 23, indicating that the market is considered overvalued. An oversold RSI could equate to a streak of downward moves, as a rule of technical analysis.

Additionally, Monero is also painting a bearish reversal pattern, dubbed the rising wedge. Rising wedges are formed when the price moves within a range defined by two converging rising trend lines.

In doing so, volumes tend to decline, highlighting traders’ lack of conviction about the price moving up.

Rising wedges typically resolve after price breaks below its lower trendline, followed by a prolonged move lower to the level traders spot after adding the high of the wedge to the breakout point.

XMR/USD 4-hour chart with RSI and Rising Wedge setup. Source: TradingView

As a result of this technical rule, XMR risks falling towards $138.50 in June — 30% lower than the price on May 23 — if the breakout point is around $180. A breakout move appearing near the apex around $200 would shift the downside target of the wedge to almost $150.

A slightly bullish XMR setup

Along with the rising wedge, XMR has also been forming a rising channel pattern, confirmed by at least two reactive highs and lows in the last two weeks, as shown below.

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Monero enters the “overbought” danger zone after XMR gains 75% in two weeks
Four-hour price chart of the XMR/USD pair with an ascending channel. Source: TradingView

XMR is now trading in the middle of its ascending channel range, with an eye on a close above $200, a historically significant support level, albeit acting as resistance. Meanwhile, the stock is holding its 200-4H exponential moving average (200-4H EMA; the blue wave) near $191 as intermediate support.

If the price breaks above $200, it would invalidate the bearish reversal setup posed by the falling wedge pattern discussed above. A decisive jump by XMR would shift its intermediate upside target near $220, up 15% from the May 23 price.

Conversely, if it fails to close above $200, it would increase the risk of XMR falling towards the $180-$175 range, marked as “retracement target” on the chart above. The zone coincides with the lower trend line of the ascending channel.

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