Analyzing Pepe’s 61% rally – Can the memecoin flip its macro structure?
The PEPE spot trading volume was heating up, which could be an unhealthy sign for the memecoin's bulls.
Over the past week, the memecoin sector has been one of the strongest performers in the crypto market, according to Glassnode data. Dogecoin [DOGE], the undisputed memecoin leader, was up 33% in a week.
Meanwhile, Pepe [PEPE] has rallied 61% in the same period. In the past 24 hours alone, it has climbed 23.9%, with the daily trading volume up 123%, per CoinMarketCap data.
The spot inflows were strong, with an $8.18 million inflow on the 21st of August. This reflected notable aggressive buying pressure. Will PEPE see continued buying? Should traders book profits instead and anticipate a momentum reversal?
Is the demand for Pepe too hot for comfort?
Over the past three days, Open Interest behind PEPE perpetuals has risen by over 50%, Coinalyze data confirmed.
The derivatives market’s fervor was matched by rising spot trading volume. The spot volume bubble map above showed that volume has been heating up over the past month.
When volume surges to overheating levels, it can be a warning sign. Contextually, the rally could be a bear market rally, the data warned, and the rapid price gains were being used to take profits while retail crowds FOMO-ed in.
Traders’ call to action- Take profits and wait
The CMF was at +0.32, confirming the heavy buying pressure. The MACD also reflected the hefty upward momentum of the past few days.
Yet, the swing structure on the 1-day timeframe was bearish. The local supply zone at $0.0000031 was decisively beaten.
The heavy trading volume, rocketing Open Interest, short liquidations, and the intense bullish market sentiment swing following Bitcoin’s [BTC] move of 23% within a week helped Pepe on a remarkable rally.
A daily session close above the swing high at $0.00000459 will confirm a bullish swing structure shift. Until then, traders and investors must be wary of the long-term downtrend.
A bullish structure shift followed by a pullback toward key former resistance zones, such as $0.0000031 or $0.0000040, can offer a buying opportunity.
Meanwhile, a price slump back below $0.0000031 would indicate the bears remain in control of the PEPE trend.
Final Summary
- The PEPE spot trading volume was heating up, which could be an unhealthy sign for the memecoin’s bulls.
- The swing structure on the 1-day price chart remained bearish despite the strong recent gains.
