Pepe Coin Rally Sees Red Flags From Bearish Patterns and Market Skepticism. Read CoinChapter.com on Google News
NOIDA (CoinChapter.com)— Pepe coin price has been on a bull run since Aug. 19, with the token spiking nearly 16% to reach a daily high near $0.0000083 on Aug. 23 before paring gains.
However, a deeper look into the market data reveals a more nuanced picture, with signals that could indicate potential challenges ahead for the token’s continued upward momentum.
Bearish Risks To Pepe Coin Rally
Despite PEPE’s recent rally, the underlying market data presents a complex picture that warrants cautious optimism. The OI-Weighted Funding Rate has shown intermittent negative values, with the trendline moving downward, reflecting a segment of traders anticipating potential declines.
PEPE OI-weighted funding rate. Source: CoinGlass
Even during an uptrend, the bearish sentiment suggests that some market participants are hedging against a possible pullback, indicating volatility ahead.
Additionally, the futures open interest has steadily declined since mid-July, even as PEPE’s price has been climbing. The reduction in open interest highlights that leveraged traders lack commitment, signaling that spot market activity may primarily drive the rally.
The rally might have overextended and be vulnerable to a reversal if open interest doesn’t increase and market sentiment remains bearish.
Furthermore, the PEPE USD pair has formed a technical setup, a ‘descending triangle pattern‘ that could add to the bearish pressure against the token.
PEPEUSD formed a bearish pattern with a 69% downside setup. Source: Tradingview
Analysts recognize the descending triangle as a bearish continuation pattern. The configuration features a declining upper trendline that compresses price action into lower highs, while a flat lower trendline serves as consistent but weakening support.
The pattern signals intensifying selling pressure, resulting in progressively weaker rallies that struggle to breach resistance.
In this setup, traders estimate the potential downside by measuring the maximum height of the triangle. Pepe coin’s price recently broke out of this descending triangle, only for bulls to push it back within the pattern.
However, if the Pepe coin price confirms the bearish setup, the PEPE/USD pair could plummet by nearly 69%, reaching a target near $0.0000026.
Price Action Slowing Down
The memecoin’s price action seems to have run out of fuel near the 200-day EMA (green wave) and 20-day EMA (red wave) resistance confluence. The declining price action suggests an accumulation of bears near the EMA trendline resistance.
PEPEUSD daily price chart with RSI.
A rebuttal of the current price rally might force the Pepe coin price to drop to the support level near $0.00000745. Failure of the immediate support level might force the token to test the support near $0.0000068 before recovering.
Conversely, if the rally continues, the PEPE USD pair could face resistance near $0.0000087. Breaking and consolidating above the immediate resistance could help the PEPE price rally to the resistance near $0.00001.
The RSI for PEPE remained neutral, with a score of 44.69 on the daily charts.
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