Monero Extends Rally as Price Hits $400, but Derivatives Market Signals Caution

Monero (XMR) climbed to $400 on Wednesday, marking a 10% gain so far this week. However, despite the steady recovery, the derivatives market remains skeptical, showing a bearish positional buildup that hints at expectations of a potential collapse. On the technical front, XMR is pressing against a key resistance trendline within a symmetrical triangle, with a breakout potentially fueling further gains.

Derivatives Market Shows Rising Doubt Despite Price Strength

Data from CoinGlass indicates that XMR futures Open Interest has risen nearly 5% in the past 24 hours to $56.24 million, suggesting fresh leveraged positions from both bulls and bears. The funding rate remains negative at -0.0327%, showing strong bearish conviction as short sellers continue to pay premiums to maintain their positions. Their confidence likely stems from previous rejections near $471 and $441 on November 9 and 30.

While this bearish buildup reflects expectations of another pullback, it also increases the risk of a short squeeze if Monero continues to climb. With the U.S. Federal Reserve anticipated to cut interest rates by 25 basis points, broader market sentiment could improve, potentially pushing XMR higher and forcing bears to unwind their leveraged shorts.

Technical Setup Points to a Potential Breakout

Monero is now up more than 2% for the third straight day, targeting the December 2 high at $428. This level coincides with a major resistance trendline formed from peaks earlier in November. A matching support trendline — connecting the November 21 and December 9 lows — forms a symmetrical triangle on the daily chart.

Breaking above $428 would signal a bullish breakout, opening the door for a run toward the R1 Pivot Point at $500.

Momentum indicators support this possibility. The Relative Strength Index sits at 53, leaving ample room before entering overbought conditions. Meanwhile, the MACD is approaching a crossover with its signal line, which would strengthen the bullish case if completed.

Key Support Levels to Watch

If Monero fails to break out, immediate support lies at the 50-day EMA near $373, followed by the S1 Pivot at $348. The 200-day EMA at $320 remains the critical long-term support level and the final line of defense for bulls.