Why PEPE could crash 16%?

Pepe price revisits an ascending trendline support on Wednesday.
On-chain data shows PEPE’s negative funding fee and lower long-to-short ratio, signaling a bearish move.
A daily candlestick close above $0.0000121 would invalidate the bearish thesis.

Pepe (PEPE) price is down 7.5% on the day at $0.0000107 as it revisits an ascending trendline support on Wednesday. On-chain data reveals a negative funding fee and a decreased long-to-short ratio for PEPE, indicating potential bearish momentum that could lead to a price decline in the coming days.

Pepe price set to crash after closing below an ascending trendline

Pepe price is down 7.5% at $0.0000107 and revisits an ascending trendline support on Wednesday. The trendline is drawn from joining multiple swing low levels between mid-April and late June, as shown in the daily chart below.

If PEPE closes below the trendline, it could crash 16% from the point of the breakout to $0.00000901. This is the 61.8% Fibonacci retracement level drawn from a swing low of $0.00000393 on April 13 to a swing high of $0.0000172 on May 27.

The Relative Strength Index (RSI) and the Awesome Oscillator (AO) on the daily chart support this bearish thesis, as both indicators are below their respective neutral levels of 50 and zero. This suggests continued momentum favoring bears, potentially leading to a further decline in the frog-theme-based meme coin.

If the overall crypto market outlook is negative, PEPE could break below $0.00000901 and extend the decline by an additional 15% to retest its May 8 low of $0.00000761.

PEPE/USDT daily chart

Coinglass’s OI-Weighted Funding Rate data is a crucial metric for traders and analysts to assess market sentiment and predict future price movements. This metric relies on funding rates from futures contracts, weighted by their open interest. A positive rate (Longs pay Shorts) typically signals bullish sentiment as long positions compensate shorts. Conversely, a negative rate (Shorts pay Longs) indicates bearish sentiment, with shorts compensating longs.

In the case of PEPE, this metric reflects a negative rate, indicating that shorts are paying longs. This scenario often signifies bearish sentiment in the market, suggesting potential downward pressure on PEPE's price.

PEPE OI-Weighted Funding Rate chart

At the same time, PEPE's long-to-short ratio is 0.839. This ratio below one generally reflects bearish sentiment in the market as more traders anticipate the price of the asset to decline, further bolstering Pepe's bearish outlook.

PEPE Long/Short ratio chart

However, if PEPE’s daily candlestick price closes above $0.0000121, the daily high from July 1, it would produce a higher high and signal a break in the market structure. This move would invalidate the aforementioned bearish thesis, potentially triggering an 11% rally to the previous resistance level of $0.0000135 from the daily high on June 26.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram