The frog-themed meme coin, PEPE, has been on a rollercoaster ride, trading within a falling wedge pattern since May 27. Despite its viral popularity, the coin’s value has plummeted by 52%, currently priced at $0.0000077. With its technical setup pointing to further declines, PEPE may be on the verge of breaking down from this critical pattern.
The Falling Wedge But A Bullish Pattern In Disguise?
A falling wedge pattern typically appears when an asset’s price moves between two downward-sloping trend lines. While this setup is often considered bullish, as the price generally breaks out above the upper trend line leading to a rally, PEPE’s current trajectory suggests a different outcome.
Since August 25, PEPE has been on a downward spiral, dropping 15% and inching dangerously close to the lower boundary of its wedge. A breach of this lower line could spell disaster for the meme coin, signaling a continuation of its downward trend and invalidating the bullish potential usually associated with this pattern.
Technical Indicators Paint a Grim Picture
The technical outlook for PEPE offers little comfort to investors. The coin has fallen below key moving averages, specifically the 20-day exponential moving average (EMA) and the 50-day simple moving average (SMA). These indicators are crucial in assessing an asset’s momentum, and PEPE’s current position below both suggests that selling pressure is intensifying.
The 20-day EMA, which reflects PEPE’s average price over the last 20 trading days, and the 50-day SMA, which tracks its average closing price over the past 50 days, now act as formidable resistance. Should PEPE attempt a recovery, these levels could trigger another price correction, further compounding the coin’s troubles.
Adding to the bearish sentiment, PEPE’s Relative Strength Index (RSI) remains below its neutral line. Currently standing at 43.13 and declining, the RSI indicates low buying activity, hinting that the meme coin may struggle to find support in the near term.
Sentiment and Market Outlook Could Bears in Control
The broader market sentiment surrounding PEPE is equally disheartening. The coin’s weighted sentiment, a metric that gauges the overall tone of online discussions about an asset, is currently negative at -0.76. This figure suggests that the general outlook among traders and analysts is predominantly pessimistic, which often precedes further price declines.
If PEPE bulls fail to defend the lower line of the falling wedge, the coin’s price could tumble to its August 5 low of $0.0000059, marking a potential 28% drop from its current value. However, all hope is not lost. Should the trend reverse, PEPE could see a resurgence, with its price potentially climbing to $0.0000086.
PEPE finds itself at a pivotal moment. With technical indicators and market sentiment both leaning bearish, the meme coin could be headed for further losses. Investors will need to keep a close eye on the lower boundary of the falling wedge pattern. A breach could accelerate the downtrend, while a reversal could provide a much-needed rally. Either way, the next few days will be crucial in determining PEPE’s fate in the volatile world of cryptocurrency.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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