The price of Monero stabilized after a sharp drop, but recovery is not straightforward. After peaking at around $800 on January 14, XMR dropped by about 33%, shaking off latecomer investors. Since then, the price trend has fluctuated within a narrow range, suggesting the formation of a continuous upward pattern.
At first glance, the structure gives a strong impression. However, when looking at momentum, capital flows, and trends in the spot market comprehensively, the situation is complex. There is a possibility of a breakout, but the conditions for that are not uniform.
Institutional investors' capital inflow also shows sluggish buying on dips.
On the 12-hour chart, Monero formed a flag-like range after a sharp decline. The XMR price broke above its upper trend line, suggesting the continuation of a broad upward trend.
The point to watch in this movement is the trend of capital flow. The Chaikin Money Flow (CMF), which measures inflows and outflows of large funds, avoided a breakdown during the range transition and has turned upwards here. The current CMF is around 0.05. If it surpasses 0.06, the conviction of the breakout will increase. A clearer confirmation will be obtained when the CMF approaches the 0.30 to 0.32 area, where sustained rises have previously occurred.
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However, the strength of buying on dips shows a different perspective. The Money Flow Index (MFI), which measures buying pressure by combining price and volume, remains weak despite the price rising from January 10 to 19, falling below 61.7.
This bearish divergence indicates that there is no aggressive buying even as the price attempts to rise.
In short, while the capital flow shows an improving trend, the behavior of investing participants remains limited.
Spot flow transition, caution due to sharp rise
The movements in the spot market are adding further tension.
On January 18, Monero recorded strong exchange outflows amounting to approximately $2.395 billion. This indicates an accumulation trend as coins are moved from exchanges to personal wallets. However, once the breakout candlestick was formed, this trend reversed.
On January 19, the exchange flow shifted, resulting in an inflow exceeding approximately $231 million. This is a typical sign that some participants returned coins to exchanges during the breakout phase, possibly moving to take short-term profits.
This timing is crucial. Ideally, a healthy breakout should reflect strong buyer intent, and continued outflows are desirable. If inflows are confirmed during the breakout, the risk of reversal rises rather than continuation.
Therefore, while XMR's price chart shows expansion, there is hesitation in the dynamics of the spot market.
Concerns about long squeeze in Monero's important price range
Attempts for Monero's breakout cannot be judged solely by spot or capital flow. Positioning in the derivatives market adds vulnerability, increasing the importance of nearby levels.
In the Binance XMR/USDT perpetual futures market, positions are clearly biased towards long over the next 30 days. Cumulative long liquidation leverage is approximately $1.394 billion, while the short side is about $572 million. The entire market is about 70% tilted towards long.
This bias is due to leverage piling up beneath the price level. In a market with excessive buy positions, adjustments are likely to accelerate during downturns, making a long squeeze more probable.
This adds additional pressure to the current structure of Monero.
From a chart perspective, Monero has broken above the upper limit of the flag pattern on the 12-hour chart. As long as the price is maintained above this breakout zone, the bullish scenario is considered technically valid. Based on the measured rise from the previous pole section, the levels of $910 to $1150 remain the upside targets.
However, for this bullish scenario to strengthen, Monero must clearly close above the previous high of $800 on the 12-hour chart. If this level cannot be reclaimed, the upward momentum risks being lost under leverage pressure.
On the downside, $620 is an important warning line. If this level is consistently breached, many long positions worth $13.94 million will be at liquidation risk. If this level is broken, forced selling is likely to turn the breakout into a failure. Furthermore, if it drops below $530, almost all long positions will be liquidated, invalidating the bullish pole & flag pattern itself.
In summary, Monero is at a turning point. The chart shows room for an increase up to $1150, but the bias towards long positions is narrowing the margin for acceptable mistakes. Until the price clearly exceeds $800, achieving a breakout will be challenging.
