- PEPE’s chart revealed that history could repeat itself as the asset formed a pattern that has triggered a rally three times in the past
- Traders are capitalizing on PEPE’s rally by selling, which may delay the anticipated breakout
PEPE has been trending higher lately, with its price gaining by 5.79% in the last 24 hours. Several factors have contributed to this rally, particularly technical activity on its price chart.
This bullish alignment can be supported by a majority of market participants. Except for spot traders who are betting against a breakout as many have started selling after days of accumulation.
Bullish break could be the start of a rally
The PEPE/WETH chart, which closely resembles the popular PEPE/USDT chart, revealed that a major rally may have begun. Especially since the price formed a pattern that has led to large breakouts on three separate occasions in the past.
This bullish structure is a descending channel, characterized by a support line and a resistance line, with each rally beginning after a breach of the upper resistance.
Source: TradingView
At the time of writing, PEPE had broken through this upper resistance, leading to its 24-hour gains. That’s not all though as projections from its press time level hinted at a possible rally of 273%. This could push the asset to $0.00002786.
However, it’s important to note that the rally to this projected level may not happen directly. Instead, the price could consolidate—similar to what occurred after the breakout of the second pattern—before reaching its target.
Sentiment stays high
Here, it’s worth pointing out that market sentiment has remained strong. In fact, the overall trading volume increased by 38.17% to hit $896 million.
A hike in volume, alongside a price surge, usually indicates strong market momentum and shows that the asset may be gearing up for a major move upwards.
In the Futures market, Open Interest was elevated, with $348 million worth of PEPE contracts open.
Now, ehile this metric represented the total contract size, it doesn’t directly reflect bullish or bearish sentiment. To better gauge market direction, AMBCrypto used the Open Interest (OI) Weighted Funding Rate.
Source: Coinglass
This metric, which combines Open Interest and funding rate data in derivatives, helps determine whether sentiment leans bullish (positive) or bearish (negative). In this case, it has stayed positive over the past three days, with a press time reading of 0.0093%.
If the metric continues to remain positive, PEPE could climb higher and potentially hit its price target.
Profit-taking could delay PEPE’s rally
Finally, spot traders appeared to be hesitant to support the projected rally. Especially as they began to sell following the bullish breakout. When this kind of selling follows noticeable price gains on the chart, it often means that traders are taking profits.
At the time of writing, spot traders had sold $8 million worth of PEPE. This trend may continue if the price climbs higher since stronger gains offer more incentives to sell.
Sustained selling will likely delay PEPE’s price breakout, allowing for more consolidation before the next major move.