After experiencing a 15% decline from the start of last Saturday’s trading session, Popcat [POPCAT] has shown a notable recovery since hitting lows on Monday. The memecoin, known for its cat theme, has established a short-term trading range on the daily chart, presenting both traders and investors with potential opportunities to capitalize on.
The overall performance of the memecoin market in recent months has been lackluster, indicating a need for caution. However, there is a promising risk-to-reward ratio that could benefit investors who navigate wisely in this space.
The Intensity of the Downtrend Poses a Substantial Challenge to POPCAT’s Rebound
Analysis of the 20-period and 50-period moving averages, which are considered quick moving averages, reveals a bearish trend since early December, with POPCAT struggling to surpass even the 20-day moving average. Moreover, the trading volume has escalated over the past six weeks as the downtrend persisted below levels seen in September.
The growing selling volume, as indicated by the A/D indicator making new lows alongside price movements, further emphasizes the impact of the downtrend. According to Fibonacci extension levels, the next potential target stands at $0.0795 if the downtrend remains unchanged.
On the 4-hour chart, a distinct trading range between $0.184 and $0.27 has emerged. Currently, POPCAT is hovering just below the upper boundary of this range. Notably, the Awesome Oscillator, previously bearish on the daily chart, shows signs of a potential bullish crossover on the H4 chart.
A breakthrough above $0.27 followed by a retest as a support level could signal a buying opportunity. Looking ahead, the next crucial lower high from the ongoing downtrend lies at $0.345.
Recently, data from Coinalyze illustrated an increase in spot CVD and Open Interest during the rebound from the range’s lower limits. Additionally, CoinMarketCap data indicated a significant 185% rise in daily trading volume at the current moment, although the funding rate remained negative.
For swing traders, a rejection from the upper range boundaries could present a chance to initiate short positions or consider trading a breakout. However, investors need to exercise additional caution, particularly given the significant depreciation in meme assets since December, with cat-themed tokens generally possessing less popularity compared to their dog-centric counterparts.
Disclaimer: The views expressed in this article are solely the opinion of the author and should not be construed as financial, investment, or trading advice.