According to analyst Ananda Banerjee, the Monero criptomoneda is showing signs of exhaustion after a significant rally throughout January. The Monero downside risk stands at 44%, driven by a rising wedge technical structure and a negative historical trend that has affected the asset for the last three consecutive years in the market.
Despite having recorded a 57% increase during the last quarter, the asset has begun to retreat rapidly after reaching a high near 799 dollars. This retraction, which represents a recent thirty-six percent correction period, suggests that the buying momentum has encountered an insurmountable barrier at the upper psychological resistance level during this specific month.
Such technical weakness manifests through the formation of a rising wedge, a pattern that usually precedes a violent reversal when the price fails to sustain its rising lows. Therefore, the Monero downside risk is aggravated by the formation of a bearish rising wedge structure, indicating that the current trend lacks the necessary strength to continue its previous upward trajectory.
Technical breakdown of capitulation and outgoing capital flows
The situation becomes even more complex when observing momentum indicators, where the Relative Strength Index has shown a persistent negative divergence against the price action. This phenomenon, where the value rises while strength decreases, confirms that the capital flow into the asset is stopping, leaving holders in a position of extreme vulnerability for the next few days.
Likewise, the Chaikin Money Flow indicator has crossed into negative territory, representing a net liquidity outflow that has not been observed since early December of last year. In this way, the loss of the twenty-day exponential moving average acts as a technical catalyst that could accelerate massive sell orders in the short term for most active traders.
Considering seasonal precedents, February has traditionally been a period of negative returns for this asset, recording monthly declines ranging between 8% and 16% on average. This historical context reinforces the thesis of a deep correction, especially after the negative history accumulated during recent February months, which increases caution among institutional operators and high-volume investors.
Which critical levels will determine the privacy coin’s fate?
For the bearish scenario to be invalidated, the price would need to firmly reclaim the 591 dollar zone, managing to stand again above its main lost technical supports. However, the Monero downside risk will be definitively activated if the value breaks the critical support of 479 dollars, opening the path toward three hundred sixty dollars very quickly.
If this support level fails to contain the selling pressure, the next technical target is located at 318 dollars, thus completing the total loss projection estimated by the wedge pattern. Nevertheless, the expected volatility for the coming weeks will determine if buyers can absorb the excess supply before the current structure completely collapses under the weight of the trend.
Ultimately, the market seems to be preparing for an adjustment that will test the resilience of the privacy community in an increasingly restrictive macroeconomic environment. The Monero downside risk remains the dominant narrative, while the confirmation of a daily close below support levels would mark the official start of the historic retracement projected for the year 2026.
