In the last month, Pendle [PENDLE] has experienced a significant surge, reaching a new monthly peak of $5.13, marking a remarkable 43% increase in the past 30 days.
While the $5 level has historically been a significant hurdle, the question arises whether Pendle can successfully break through it this time.
Challenges Faced by PENDLE Crypto
Presently, a barrier has emerged, attracting short sellers and reflected in the red daily candlestick’s appearance. This development might prompt short-term holders to capitalize on profits.
Furthermore, crucial technical indicators on the chart are indicating overbought conditions, hinting at a potential correction. Notwithstanding, Pendle has been consistently establishing higher highs and higher lows, indicating a bullish market trend.
Given this scenario, opting for a long position rather than shorting Pendle seems reasonable. There are two plausible long strategies to consider.
The first approach involves re-entering the market at the short-term support above $4 and the 50-day EMA (blue line), with an optimistic target set at $5, potentially yielding a 23% gain, contingent on Pendle retracing to $4.
Alternatively, the second strategy entails the retesting and conversion of $5 into a support level, allowing bullish investors to aim for the $6 target, presenting an 18% potential profit.
A breach below $4 would nullify the long position, necessitating the placement of a stop loss slightly below this level.
Reduction in Exposure by Pendle Whales
Despite the robust recent uptrend signified by an ADX score of 43, the actions of Pendle whales advise exercising caution.
Historically, a surge in Pendle prices occurs when whales accumulate more than retail traders. Conversely, a reduction in whale exposure often precedes a market pullback.
From early October to the present, whales have been accumulating Pendle positions, propelling the price higher. However, whale investors have slightly reduced their exposure recently, potentially triggering profit-taking around the $5 level.
Corroborating this observation, Santiment data indicates a slight drop in the Supply Held By Whales metric.
Additionally, a surge in Supply outside Exchanges was observed, suggesting an accumulation trend, possibly among retail investors, with limited immediate impact on Pendle’s price.
During the August market downturn, elevated accumulation trends spearheaded by whales preceded a subsequent rally in Pendle prices. However, a robust rally in Pendle might face challenges if whales opt for a less active role.
Hence, a retreat from the $5 level could bolster the feasibility of the first long scenario. Conversely, a breach below the dynamic support of the 50-day EMA would invalidate the positive outlook.
Disclaimer: The analysis presented should not be construed as financial advice; it reflects the personal opinion of the author.