- PEPE has formed a bullish structure that could trigger a rally, supported by spot traders.
- However, technical indicators and derivative market metrics suggest that an 11% decline could be likely.
Pepe [PEPE] has maintained a bullish trend since last week, posting a cumulative gain of 3.22%.
While the asset has formed a bullish pattern indicating the potential for further upside, several other market signals don’t align with that outlook.
AMBCrypto analyzed the key factors that could hinder a potential rally and those that support further upward movement.
PEPE forms a bullish ascending pattern
On the 4-hour chart, PEPE was trading within a bullish ascending triangle pattern, characterized by a horizontal resistance level and an ascending support line converging.
Typically, when prices oscillate within this structure, a breakout to the upside often follows, breaching the resistance line.
A close look at the chart below reveals that each time PEPE approaches this resistance level, it produces prominent wicks rather than full-bodied candlesticks.
This behavior suggests strong selling pressure at the resistance level, which could trigger a pullback.
But that’s not all. Additional metrics also point to increasing downward pressure.
Source: TradingView
Moreover, the formation of a death cross — where the 20-day SMA slipped below the 200-day SMA — adds to bearish sentiment.
At the time of writing, the 20-day SMA crossed below the 200-day SMA, pushing the price toward the pattern’s support level.
The Accumulation/Distribution (A/D) indicator also confirms this bearish trend, showing that the market has entered a distributive phase. In this phase, participants begin selling the asset, causing it to trend lower.
Source: TradingView
Momentum wanes as volume drops despite price uptick
On top of that, volume dynamics showed fatigue.
While PEPE rose 1.49% in the last 24 hours, trading volume fell by 36.4%. This Price-Volume divergence typically suggests a weak rally with fading follow-through.
Derivative traders could further contribute to PEPE’s decline.
The Funding Rate, which indicates which segment of the market is more dominant, has turned negative at -0.0097. This shows that short sellers are in control, paying a periodic fee to maintain their positions.
Source: CoinGlass
Spot traders are accumulating
Despite the broader selling pressure, spot traders have continued to accumulate the memecoin. In the past week alone, they bought $37 million worth of the asset.
This figure is significant because the last major accumulation occurred on the 3rd of March, when $53 million worth of PEPE was moved to private wallets.
Source: CoinGlass
Given the bearish sentiment, this recent accumulation appears to be a strategic move by traders looking to capitalize on lower prices.
Overall, spot trader activity could slow the memecoin’s decline as they continue accumulating during the dip.