PEPE bulls step in with $37 mln – But is the memecoin’s rally losing steam?

• 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.