A brief rally in Solana-based meme coins came to an abrupt end, with Bonk (BONK), Cat in a Dog's World (MEW), and Book of Meme (BOME) leading the decline.
The value of these tokens rose on Wednesday but has since retreated and is expected to continue falling.
BONK hovers below key moving averages
Despite the increase in BONK’s value on Wednesday, its price remains below its 20-day exponential moving average (EMA), which measures the average trading price over the past 20 trading days.
When an asset price is below its 20-day EMA, it usually indicates a short-term downtrend. This means that the average price over the past 20 trading days is higher than the current price. This suggests that buying pressure has weakened, and if selling pressure increases, the asset price may continue to fall.
BONK’s Elder-Ray Index is negative, confirming the surge in selling activity. At press time, the meme coin’s Elder-Ray Index stands at -0.0000024.
The index measures buying and selling pressure in the market. A negative value means that selling pressure exceeds buying momentum, indicating that sellers are dominant and pushing asset prices down.
If BONK bears continue to dominate, the token price could drop to $0.000020. If demand remains subdued, the price could fall further to $0.000012, a level not seen since April.
However, if the sentiment switches from bearish to bullish, the memecoin price could climb to $0.000025, invalidating the pessimistic predictions.
MEW faces weakening upward trend
At press time, MEW is trading at $0.0057. However, momentum indicators on the daily chart suggest that the uptrend is weakening. For example, its Aroon uptrend is down 7.14%.
The Aroon indicator tracks asset price trends and signals potential trend reversals. The declining uptrend line shows that prices are moving away from recent highs, reflecting a weakening uptrend. This means that the asset could enter a consolidation phase or start a downtrend.
While MEW’s positive directional indicator (+DI) is currently above its negative directional indicator (-DI), indicating stronger buying pressure, the average directional index (ADX) is 20.22, suggesting that the uptrend is weak and the market could move sideways.
If the selling pressure increases, the price of MEW could drop to $0.0046. However, if the uptrend strengthens and the buying pressure surges, MEW could rise to $0.006.
BOME has negative divergence
Despite BOME’s rally to a peak of $0.0074 on Wednesday, its Chaikin Money Flow (CMF) remains negative, forming a bearish divergence. The indicator measures the inflow and outflow of funds into an asset. At press time, BOME’s CMF remains negative at -0.34.
A bearish divergence occurs when an asset's CMF is negative while its price rises. This suggests that rising prices lack strong buying activity and may be due for a correction. Traders often take this as a cue to exit long positions and consider going short.
If BOME’s price sees a correction, it would revisit the five-month low of $0.0053, where it was trading during Monday’s market downturn.
However, rising demand could push its price up to $0.011.
