Pepecoin price has dropped by more than 70% three weeks after reaching an all-time high of $0.00000449. And according to a mix of technical and fundamental indicators, Memecoin could drop further in the coming days.
PEPE charts show a classic bearish reversal pattern
From a technical perspective, Pepecoin (PEPE) price is likely to decline sharply from the current levels. At the heart of this bearish outlook is the classic head-and-shoulders (H&S) pattern.
Analysts using technical analysis view the H&S pattern as a bearish reversal indicator for the inexperienced. It is formed when price forms three spikes above a common neckline support; The middle peak, called the “head”, is higher than the other two, called the “left shoulder” and the “right shoulder”.
The H&S pattern disappears after the price breaks below the neckline. Meanwhile, as a rule of technical analysis, traders measure the downside target of the pattern by adding the maximum head-to-neckline distance at the break point.
On May 22, PEPE broke below its H&S neckline, around $0.00000156. This brings the downside target for June near $0.00000041, which is almost 70% downside from the current price level.
Meanwhile, PEPE tests $0.00000082 for June recovery as H&S outage may end up in the middle. This level, about 30% below the current price level, served as support in early May; This further coincides with the 0.786 Fibonacci line of PEPE.
On the other hand, if PEPE retests the H&S neckline as price support, the outage scenario risks being invalidated.
Will existing PEPE holders dump?
Despite the recent losses, PEPE is still trading up 4,000% when measured from the first price of $0.00000044. As a result, further price declines could prompt existing PEPE holders to lock in profits, increasing the bearish bias.
Related: How to Profit from Bitcoin Volatility with Market Analysis and Trading Bots
Concerns arise if one follows PEPE’s top 15 high-yield addresses. Almost all institutions have reduced their PEPE holdings in recent weeks, with some even dumping their entire stock to capture early gains.
At the same time, the number of daily holders of PEPE has remained the same since May 5, indicating that no unique users are entering the network.
This has translated into lower trading volumes on crypto exchanges, which is another bearish sign for existing token holders.
PEPE could avoid a bearish outlook in the event of widespread crypto upside due to possible rallies in the bitcoin (BTC) and ether (ETH) markets.
This article does not constitute investment advice or suggestion. Every investment and trading move involves risk and readers should do their own research when making decisions.
This article is for general information purposes and is not intended and should not be construed as legal or investment advice. The views, opinions and opinions expressed here are those of the author alone and do not reflect or represent the views and opinions of Cointelegraph.
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