Pepe coin eyes bullish reversal amid short-squeeze risk as traders bet against rally Read CoinChapter.com on Google News
LUCKNOW (CoinChapter.com)— Pepe coin price is currently consolidating near the support trendline of a bullish technical pattern, which could help the memecoin muster some serious gains.
However, some traders, like Crypto Bully, plan to short the memecoin. The trader’s short position on PEPE could be risky based on a breakdown from key levels and a filled volume gap.
If the price unexpectedly rallies, a short squeeze may occur, forcing short sellers to buy back their positions. This could potentially drive prices higher and lead to significant losses.
A short squeeze could help the PEPE USD pair have a chance at confirming a bullish technical pattern.
PEPE Price Paints Bullish Setup
The Pepe coin price has painted a bullish technical setup called the ‘falling wedge.’
The falling wedge pattern often signals that an asset is losing bearish momentum despite being in a downtrend and may be primed for an upward reversal. Typically, the breakout from a falling wedge aligns with the prevailing trend, indicating a likely upward move.
To determine the potential price target, traders measure the wedge’s widest section at its inception and project this distance upward from the breakout point. This projection provides a possible price target.
Moreover, increased trading volume during the breakout often confirms its strength. Higher volume indicates a stronger market conviction, enhancing the likelihood of a sustained reversal.
Applying the principles of technical analysis to the PEPE/USD pair suggests a potential rally of up to 178% from the current level, with a theoretical price target near $0.00002099. Furthermore, a move towards the upper trendline of the pattern could attract more buyers, anticipating a bullish breakout.
Bearish Pressure Curtailing Upside Movement
The bearish pressure against the token has likely forced PEPE price to consolidate above the wedge pattern’s support trendline. However, the memecoin started the new week positively, spiking over 7.5% to reach a daily high near $0.000007702 on Aug .19 before correcting.
Bulls are trying to continue the rally on Aug. 20 but it seems likely that PEPE price would succumb to the bears.
A sustained rally for the token would see PEPE face resistance from its 20-day EMA (red wave) and 200-day EMA (green wave) near $0.00000845. Breaking above the immediate resistance would help the memecoin target the resistance near $0.00001 before retreating.
Conversely, a failed rally would likely force the PEPE USD (and other trading pairs of the token, like the PEPE INR) test the support levels near $0.0000068 and $0.00000586.
The RSI for the token remained neutral, with a score of 40 on the daily charts.
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