PEPE could see a bounce back in the market.
- PEPE breached a multi-year support level and could repeat its rally move from the previous year. Spot traders keep accumulating; however, selling pressure in the derivatives market remained high.
In the past 24 hours, Pepe [PEPE] has declined by 6.03%, at press time, as selling pressure grew, dragging its weekly loss even lower to 26.02%, with a monthly downturn of 31.88%.
Despite this sluggish market performance, bullish positions have appeared on the chart, suggesting a price boom could be on the way. AMBCrypto has analyzed the possibility.
PEPE: Historical rally point breached
The chart shows that PEPE has broken a one-year support level that previously facilitated price recovery. Significant pressure is evident at this level, as seen during PEPE’s last trades here, which led to a 348% rise.
This recent support-level breach might indicate a stop hunt, where investors push prices lower intentionally. This triggers numerous stop-loss orders before they quickly buy more of the asset, causing a rally.
Source: TradingView
In April 2024, PEPE breached this support level in a stop-hunt move, followed by a 338.9% bounce.
A similar scenario might occur here. However, the bounce could also lead to a further drop, potentially reaching the lower support of $0.00000399. Afterward, PEPE may resume its upward trajectory.
The Relative Strength Index (RSI) measures overbought (above 70) and oversold (below 30) conditions. PEPE recently exited the oversold region, with a current RSI reading of 31.87 and trending higher.
If this trend continues, it could signal the start of a PEPE rally.
Source: TradingView
The last two RSI cycles suggest sellers are not fully exhausted, as prices rise slightly before dropping again. If this pattern persists, PEPE’s recent RSI bounce may only be temporary.
A sustained rally would require the RSI to exceed the last three circled points significantly. This shift would indicate that sellers are fully exhausted, allowing buyers to re-enter the market.
In the spot market, investors continue to show interest in PEPE. Over the past week, traders collectively purchased $53.11 million worth of PEPE. This is the highest weekly purchase since late January when over $85 million was bought.
AMBCrypto’s analysis indicates some bullish sentiment in the market. However, sellers in the futures market are still betting on a price decline.
Futures market signals heavy selling pressure
At the time of writing, the Futures’ Open Interest (OI) Weighted Funding Rate has declined to a historic level of -0.0297, the lowest since its inception.
A major negative OI-weighted funding rate like this indicates that sellers heavily dominate the market. This metric combines OI with the Funding Rate to determine potential market trends in the derivatives market.
Source: Coinglass
With trading volume rising by 91% to $574.57 million and prices plummeting, this indicates that the ongoing selling is backed by high momentum.
If this trend continues, PEPE could fall further, potentially reaching its lower support bound.
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