The price of Pepe coin, a popular memecoin, is currently hovering near a key support level within a bullish technical pattern, hinting at potential gains in the near future. However, the path to a price surge remains fraught with challenges from both technical resistance and bearish short sellers.
Bullish Wedge Signals Potential Breakout
Technical analysis of the PEPE/USD chart reveals the formation of a falling wedge, a pattern that often precedes a bullish reversal. This pattern signifies weakening bearish momentum despite a downtrend, suggesting a potential upswing. Historically, breakouts from falling wedges tend to follow the prevailing trend, which in this case would be upward.
Technical analysts can leverage the falling wedge pattern to estimate potential price targets. By measuring the widest section of the wedge at its beginning and projecting that distance upwards from the breakout point, we can arrive at a theoretical target price for PEPE. Applying this method to the PEPE/USD chart suggests a potential 178% rally, with a target zone near $0.00002099.
Furthermore, a surge in trading volume alongside the breakout would bolster its strength. Increased volume indicates strong market conviction, which can fuel a sustained price reversal.
Short Sellers and Resistance Levels Pose Obstacles
Despite the bullish setup, some traders, like the well-known analyst Crypto Bully, are planning to short the memecoin, betting on a price decline. This short position could backfire if PEPE unexpectedly rallies, triggering a short squeeze. In a short squeeze, short sellers are forced to buy back their positions to avoid significant losses, further driving prices higher.
A successful price squeeze might pave the way for the PEPE/USD pair to confirm the falling wedge pattern. However, the memecoin faces immediate resistance from its 20-day and 200-day exponential moving averages (EMAs) at around $0.00000845. Overcoming this hurdle could see PEPE target resistance near $0.00001 before a potential pullback.
Also Read: Bearish Storm Brews For Pepe Coin – Exchange Outflows And MVRV Signal Trouble
Bearish Scenario and Support Levels
On the other hand, a failed rally could see PEPE revisit its support levels at $0.0000068 and $0.00000586. The token’s Relative Strength Index (RSI) currently sits at a neutral 40 on the daily charts, indicating no clear dominance of buyers or sellers.
The Pepe coin price presents a curious case. While the falling wedge pattern hints at a potential breakout and significant gains, bearish pressure from short sellers and key resistance levels pose significant challenges. Watching how the price action unfolds around these technical levels and market forces will be crucial in determining the memecoin’s future trajectory.
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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