Pudgy Penguins [PENGU] token has rallied 8.6% in a day as the altcoin market continued to make gains. Since the 1st of January, the altcoin market cap, excluding Ethereum [ETH], has increased by 7.5%.
The market-wide short-term strength was particularly evident in the memecoin sector. PENGU was one of the meme tokens posting strong gains, and it was up 47% since the start of the year.
Should PENGU traders buy the strength?
An AMBCrypto report from the final week of December noted the persistent selling pressure on PENGU and its long-term downtrend. A quick rebound was not anticipated, but it has come to pass, and more gains are possible.
The 3-day chart highlighted the bearish trend since August, which wiped out the rally in June and early August. The volume and momentum indicators were still bearish, but were beginning to recover.
A breach of the lower high at $0.0128 would signal a shift in the bullish structure on this timeframe. This would give lower timeframe traders a buying opportunity.
The next long-term targets would be $0.016 and $0.022.
The risks of going long
The bullish memecoin party would continue so long as Bitcoin [BTC] buyers keep the rally going.
A BTC correction could see deeper volatility across the market. Additionally, traders and investors looking to buy at the bottom should remember that Bitcoin exhibited weakness in recent months that won’t be undone anytime soon.
Traders’ call to action- PENGU is bullish
The breakout above the past month’s range formation (yellow) was an encouraging development. The lower timeframe momentum and buying pressure were clearly visible on the 4-hour timeframe.
A retracement toward $0.0110-$0.0115 is possible due to the bearish momentum divergence. A drop below $0.0105 would hint at a fading rally, while a breakout past $0.0128 would cement bullish strength.
Final Thoughts
- The memecoin markets have been outperforming recently, a trend that could continue over this week.
- Traders should be prepared to go long but also watch Bitcoin for potential weakness that could affect PENGU sentiment.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.