Pepe bulls have been steadfast in defending the crucial 78.6% Fibonacci retracement level. Despite the lack of high buying volume, which has kept momentum neutral, the bulls have managed to hold their ground. This level, derived from the April-May rally, remains a pivotal support, and its defense is critical for maintaining bullish hopes.
The on-chain metrics for Pepe [PEPE] have shown signs of weakening, with active addresses declining and trading volume remaining low. Whales, who often drive significant market movements, appear to be on the sidelines, further contributing to the neutral momentum. However, short-term gains have been observed, indicating some resilience among the bulls.
Volatility and Swing Positions
The volatility of Pepe could pose challenges for swing traders. The 78.6% retracement level has seen some short-term deviations, but it continues to act as a support. Swing traders might consider entering long positions during a retest of this level, but they must account for the short-term volatility in their stop-loss orders.
Over the past month, neither momentum nor buying volume has been particularly strong, suggesting that Pepe is in an accumulation phase. A daily close below the $0.000006 level would signal that bears are gaining control. Until then, buyers can continue to accumulate Pepe, anticipating a potential recovery. The On-Balance Volume (OBV) has been trending higher since August, which could boost the chances of a rally.
Liquidity and Market Sentiment
Market prices are often attracted to clusters of liquidity, and one such pocket exists around the $0.000006 zone. This area also marks the lows that Pepe fell to on August 5th. Traders and investors should be prepared for a potential quick downward slump, although this is not guaranteed. Not every pool of liquidity is successfully tested, but the likelihood of a drop remains.
In the short term, market sentiment appears bullish. Following gains on September 13th, Open Interest (OI) climbed from $235 million to $273 million, indicating that speculators are eager to go long. This bullish sentiment is reflected in the continued belief in further gains, despite a minor price dip since then. However, a sharp correction in Bitcoin [BTC] could negatively impact these long positions.
Conclusion
In conclusion, while Pepe bulls have managed to defend key support levels, the lack of high buying volume and neutral momentum suggest that a strong rally is not yet in sight. The market sentiment remains cautiously optimistic, with speculators showing a willingness to go long. However, traders should be prepared for potential volatility and downward slumps, especially if broader market conditions change. The accumulation phase could provide opportunities for buyers, but caution is advised given the current market dynamics.
