Pepe settled into a range formation over the past four days.
The liquidation levels below the range low presented an attractive short-term price target.
In an earlier analysis, it was reported that Pepe [PEPE] faced risks of profit-taking. The 61.8% Fibonacci retracement level at $0.0000145 has temporarily rebuffed the bullish advance.
The memecoin had made exemplary progress beyond long-term resistance levels in May, but its momentum had stalled over the past four days.
During this period, the bullish momentum of Bitcoin [BTC] has also slowed down. The altcoin market had been trending higher for a month, but saw some short-term setbacks.
As a result of the shift in sentiment, it was possible that PEPE would witness a price drop.
How deep could this PEPE retracement go?
Source: PEPE/USDT on TradingView
The range formation, highlighted in purple, extended from $0.0000127 to $0.0000148. The mid-range level was at $0.0000138. PEPE had slipped below this support in recent hours.
The RSI on the 4-hour chart also reflected a shift in momentum recently.
It fell below the neutral 50 level, an early indication that sellers were taking the upper hand. However, the OBV remained static near the local highs. This was because of the low trading volume over the past three days.
Hence, even though PEPE might witness a dip, the selling pressure was not overwhelming. The price dip was instead a product of the wider market sentiment, as well as a move towards liquidity.
Source: Coinalyze
The Open Interest, like the OBV, has been flat over the past four days. It reflected a lack of speculative interest in the memecoin.
Yet, the Funding Rate remained positive. It appeared that Futures traders were unwilling to enter new positions, but short-selling was not popular either.
Source: CoinGlass
The 1-week liquidation map also gave valuable clues. It underlined the $0.0000124-$0.0000127 area as a nearby liquidity pocket. These levels were just below the short-term range plotted earlier.
Therefore, it was highly likely that PEPE would present a deviation below the range in the next few hours. Such a dip would likely be a buying opportunity.
Traders taking long positions should manage their risk and position size wisely, knowing that a bullish reversal was not guaranteed.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
