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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- CAKE indicators and metrics reflected bullishness
- The price action favored the buyers at a glance, but a deeper look showed otherwise
PancakeSwap [CAKE] has trended downward for a long time now. The token initiated a higher timeframe downtrend in mid-November 2021 when it was trading at $17.4. There were a handful of sizeable rallies in between, but the token was caught in a steady downtrend.
Read PancakeSwap’s [CAKE] Price Prediction 2023-24
A little over two months ago, the PancakeSwap V3 was launched on Zksync Era. A recent update from the DEX noted that trading volume had surpassed $850 million. Other metrics saw an uptick as well but does this imply the long-term downtrend has reached its end?
The shift in the CAKE market structure could be a red herring
Source: CAKE/USDT on TradingView
The daily chart above showed a steady downtrend. The two important long-term horizontal levels were $1.3 and $1.13. On Monday (23 October), the $1.13 level was breached alongside the previous lower high at $1.179.
This was a bullish break in the market structure. Yet, the Fibonacci retracement levels (pale yellow) pointed to a brief relief rally rather than a break in the downtrend. The 78.6% level at $1.23 was tested and saw CAKE prices rejected in recent hours.
Hence it was possible that CAKE would continue to slump lower in the coming weeks. The indicators, which were lagging by nature, pointed toward bullish strength. The Relative Strength Index (RSI) climbed above neutral 50 and the On-Balance Volume (OBV) initiated an uptrend. A move past the local highs at $1.3 could be a strong sign that the token would embark on an extended rally.
On-chain metrics painted a bullish picture for the token
Source: Santiment
The mean coin age of CAKE has trended strongly upward since late September. The social dominance metric saw far more spikes in September and October than they did between May and August.
How much are 1, 10, or 100 CAKE worth today?
This signaled more social media engagement that was also positive behind CAKE. On the other hand, the Market Value to Realized Value (MVRV) ratio remained in negative territory, highlighting an undervalued asset.
