PEPE, the frog-themed cryptocurrency, has been trading in a falling wedge pattern since May 27. Currently priced at $0.0000077, its value has dropped by 52% during this period.
PEPE price could fall further, as it appears to be preparing to break below the lower line of the falling wedge, which would signal a continuation of the downtrend.
Pepe tries to find a new bottom
A falling wedge pattern occurs when the price of an asset moves between two downward sloping trend lines. The upper trend line acts as resistance, while the lower trend line acts as support.
Typically, despite the bearish bias in the wedge, this pattern is considered a bullish signal because price often breaks above the upper trendline after completion, leading to a move upwards.
PEPE, however, may be an exception. Since August 25, the price of the meme has fallen 15%, pushing it closer to the lower line of the falling wedge.
When the price of an asset breaks below the lower trendline of the falling wedge, this invalidates the bullish predictions usually associated with this pattern and suggests that the downtrend may continue.
PEPE’s technical profile supports this possibility. The altcoin has fallen below important moving averages, trading below both the 20-day exponential moving average (EMA) and the 50-day simple moving average (SMA).
The 20-day EMA reflects the average price of the asset over the last 20 trading days, while the 50-day SMA tracks the average closing price of the asset over the last 50 days. When an asset’s price is below these averages, it indicates that momentum is weakening and the possibility of a further downtrend as selling pressure increases. If PEPE reverses and begins an uptrend, these averages will act as resistance, which could lead to another price correction.
Additionally, PEPE's Relative Strength Index (RSI) remains below the neutral line and has been there for most of the past month. The RSI measures whether an asset is overbought or oversold.
At 43.13 and falling at the time of writing, PEPE's RSI shows low buying activity among market constituents.
PEPE Price Prediction: It All Depends on the Bulls
The negative sentiment surrounding PEPE is further reinforced by its negative weighted sentiment index, which is currently at -0.76.
A sentiment weight below zero indicates that the overall online conversation about the asset is predominantly negative. This negativity typically signals a continued decline in the asset's price.
If PEPE bulls fail to defend the lower line of the falling wedge, the price of the meme coin could drop to the August 5 low of $0.0000059, a 28% drop from its current value.
However, if the current trend reverses and PEPE resumes its uptrend, its price could rise to $0.0000086.
