Monero — Where is the price of XMR headed next?
In this update, I’m going to use a top-down approach in our analysis of Monero. For those of you that aren’t familiar with what we do, we have a directional model — it’s multi-duration, its fractal, it’s all about wave formation, vibration, energy cycles and waves. You have to have an understanding of not just price but you must also understand the time component. That’s the cyclical analysis. When we do a top-down approach, we start from the higher time frames and then we work our way down and peel back the different layers of time. So I’m going to briefly walk through what Monero is looking like now, starting with the Monthly chart.
Typically when we look at the crypto market right now a lot of the altcoins don’t have enough data for a monthly cycle. However, Monero is a name that has been around a little bit longer so I’m not surprised to see that there is a monthly cycle developing. Ever since price peaked out in the month of August, we had a cycle cross the following month in September and now we’ve had two back-to-back bearish months (the last 2 candles are down). To me, there’s still a lot of room for this cycle to come lower. Without having to draw a price projection, you could cycle down into the end of the year no problem, so we’ll see. But the monthly trend is still up. You have the wave formation bands rising, that’s showing you the positive bullish wave, price is making higher lows and higher highs — that’s all indicative of an uptrend so we’re still long term bullish. Before we see Monero take another run to new highs, maybe we first need to let this cycle come back down into the end of the year.
On the Weekly chart we see there is still a very nice bullish technical formation, or what we call technical market structure. Price is still making a series of higher lows so from a trend perspective and from a price perspective the market hasn’t done anything wrong. The stochastic is showing a nice rhythm as it illustrates how energy flows. You cannot ignore the time component that goes through the markets and how energy moves in cycles. Everything cycles — life itself is a cycle, energy travels from the sun via light waves, etc. We look to buy in the low of the cycle and this is how you time markets. You’ve got to understand the time component; that’s what timing is about, you’ve got to understand the time piece.
So on the weekly level again we see the cycle crossed in September and price dropped down into the bottom of the bands. I expect to see this anytime price breaks the 8 period moving average (red line) because it’s the next signpost or place to look where the market could go to. We saw price have a nice bounce from the bands back to the 8 MA and you’ll see here in a moment when I go to the Daily chart the 8 MA and these bands will represent different levels on the Daily chart. That’s why we call our model a fractal model — similar patterns repeat on the smaller time frame and then they build on top of the higher time frames. So the cycle can potentially continue lower from here. Maybe we have to finish out October before we have another nice rally on altcoins in general, and specifically Monero.
We come down to the Daily chart next. Monero is pretty oversold, along with the rest of the altcoin market, coming into this week so we want to start to building into the position. We started nibbling again after taking profit pretty well, then got a little bit heavier with our subsequent buys. The area where we are now is where I want to try to catch the right-hand side of the cycle, or the right-hand side of the chart as we call it. We’ll look for a change in the intermediate term trend and some higher highs on this side of the chart to start getting more aggressive on Monero, if it can turn the corner. However, if price continues to move lower then we’ll be glad that we didn’t add until we get the turn. It’s not always that easy to see but that’s the idea. Again, we’re going to time that up with the intermediate term trend as well as daily cycle.
I want to point out that you can follow the intermediate term trend by looking at the 8 period moving average, or red line on the chart. You’ll notice that price has not been able to get above that line until just recently. Until now, price has been trapped underneath the 8 MA and what that 8 MA is showing you is the intermediate term downtrend. Price has also been unable to make higher highs but it’s trying to get above the most recent highs. What I want to see is a close now back above the 0.017 area. It’s also interesting to note the size of the candle that started this most recent move up. You’ll notice this is probably the largest candle since the downtrend began and we refer to it in our model as a Real Money Candle. These are the footprints of money. Up until just recently, all of the control and all of the power has been with the bears. The bears are the ones with all the large down candles and any small effort the bulls could muster has been taken out by the bears until this large Real Money Candle emerged. So what we need to see is more candles like this start to pop up to show that a new move up may be starting, similar to what we saw back in mid-August.
Zooming into the 4 Hour chart, we can observe what’s happening in the intermediate term. I’ve marked where the wave formation bands started to fan out and turn negative and the wave has just been down ever since. Only recently has the price action been more encouraging in terms of the upside and I like the fact that we’re finally trying to make higher highs. As price tries to get back above the bands, we just need a little bit more traction and then this can start to turn bullish again for the intermediate term. From there, we would want to start timing it up the higher highs and higher lows with the cycle. Right now all we have had are lower lows until we recently got an interesting double-bottom and price failed to make a lower low. One of the first signs that a market is trying to turn is when price stops making lower lows. Now, price can still bounce and make a lower high before it breaks to new lows so you never know if the market has truly bottomed. But the recent price action has at least shown that the bulls have stopped price from making lower lows. Let’s see if we can maybe make another higher low and then start to see a series of higher highs and higher lows follow. This will turn the intermediate term trend bullish and that’s what I’m waiting for. That’s the right-hand side of the chart, the right-hand side of the cycle that we’re looking for.
I hope that helps. If you like this and you’d like to get involved in trading the crypto space then I believe you need to have a timing product. There is so much volatility that you are going to need some help with the timing piece and that’s what we do on our crypto-coin trading team. Come check us out here for more: http://www.jenkinsrm.com/crypto-coin-team/
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A little about me now…
Before joining CG Capital, I spent almost a decade trading US Treasuries and building out a successful institutional analysis and fixed income trading business. I have covered all the primary dealers, large buy-side money managers and hedge funds. My financial career began at Charles Schwab as a trader in the equity and options markets before moving to the sell-side to trade fixed income at vFinance, JVB Financial, and CG Capital.