Pepe [PEPE] witnessed a decline in its on-chain metrics, yet managed to achieve short-term gains in the recent days. Active addresses decreased, and trading volume was also not particularly high, while whales indicated a preference to stay on the sidelines.
Looking at the price action chart, the crucial Fibonacci retracement level continued to act as a support. As long as this level holds, Pepe bulls remain optimistic.
Pepe’s volatility may impact swing positions
The Fibonacci levels derived from the April-May rally remained relevant. The 78.6% retracement level remained a strong support, despite some minor deviations in the short term.
This implies that swing traders could consider entering long positions upon a retest of this retracement level.
They should set stop-loss orders considering the short-term fluctuations around this level. Additionally, with the momentum and buying volume lacking strength over the past month, it suggests that PEPE is undergoing an accumulation phase.
If there is a daily close below the $0.000006 mark, it could signal the dominance of bears. Until then, buyers might consider accumulating more PEPE and await a potential rebound.
The On-Balance Volume (OBV) has been gradually increasing since August, enhancing the likelihood of a Pepe rally.
Will institutional investors attempt to shake retail traders out of their positions?
Prices tend to gravitate towards liquidity clusters, and CryptoCrypto identified one such zone around the $0.000006 region. This level also coincided with the previous lows that the meme coin touched on the 5th of August.
Hence, traders and investors should be ready for a rapid downward move.
While such a drop is not guaranteed, it is a probable scenario at this juncture, as not every liquidity pool is thoroughly tested.
Short-term market sentiment seemed bullish. Following the gains on September 13th, the Open Interest surged from $235 million to $273 million.
Speculators showed a keen interest in going long, aiming for profits from the PEPE price action and reflecting a bullish outlook. Despite a slight price correction since then, the Open Interest has not significantly decreased, indicating that long positions still anticipate further gains.
This could pose a challenge for them if Bitcoin [BTC] experiences a sharp correction in the upcoming days.
Disclaimer: The content provided here is the author’s personal opinion and should not be considered as financial, investment, or trading advice.