The price of Pepe Coin has faced significant pressure recently, erasing most of the gains achieved earlier this month when it reached a new all-time high. While the price has stabilized in recent days, a rare pattern on the daily chart indicates the potential for a 35% drop. Pepe's open interest in the futures market also suggests further declines in the near term.
Bear Flag Pattern Indicates Further Downside
The price of Pepe Coin is struggling against strong bearish forces, having fallen below the 50-day exponential moving average (EMA) on the daily chart. This downturn followed the creation of a "doji" candlestick pattern on December 9, signaling indecision at its peak price.
Now, Pepe Coin is forming a bear flag pattern – a continuation chart pattern that typically predicts further declines. The bear flag consists of a steep drop (the flagpole) followed by a period of consolidation in a rectangular shape (the flag). If the pattern plays out, Pepe Coin could fall to $0.00001437, the lowest level from last week.
Further declines could push the price to its next key support level at $0.00001190, which is approximately 35% below the current price. This level corresponds to the high from September 29.
Conversely, a move above the resistance at $0.000020 – slightly above the 50-day EMA and the peak on December 21 – would invalidate the bear flag and pave the way for further gains, potentially retargeting the double-top pattern at $0.00002563.
Plunge in Futures Open Interest
One factor amplifying the bearish outlook for Pepe Coin is the sharp drop in futures open interest over the past few days. Open interest, which tracks outstanding futures contracts, peaked at $359 million earlier this month when Pepe hit its all-time high. However, it has now plunged to $123 million, the lowest level since November 4.
A steep decline in open interest can signal waning demand for the asset. However, in some cases, such a drop can also pave the way for a recovery, as seen on November 5, when open interest fell to $108 million and was followed by a price rally.
Bitcoin's Influence on Pepe Coin
Pepe Coin's price movements remain closely tied to bitcoin. Historically, altcoins have followed bitcoin's trends, and further declines in BTC could exacerbate Pepe's losses.
Last week's bitcoin sell-off led to widespread declines in the altcoin market, putting additional pressure on Pepe Coin. Market participants are now watching whether bitcoin can stabilize, which could ease the bearish pressure on other cryptocurrencies.
What’s Next for Pepe Coin?
Pepe Coin finds itself at a critical juncture. Technical indicators and market signals suggest that future price action will depend on whether the coin can break above the $0.000020 resistance or lose support at $0.00001437.
The broader market outlook, heavily influenced by bitcoin, will play a key role in determining whether Pepe Coin can reverse its bearish trend and stage a recovery. Investors will need to closely monitor these levels and the broader market dynamics in the coming days.
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