Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
Pepe [PEPE] has been firmly under the control of the bears for some time. It has consistently made lower chart lows throughout May.
However, the price action reached a critical level, which could improve recovery chances, especially if Bitcoin [BTC] exceeds $28k.
Will PEPE bounce back from this support?
Source: PEPE/USDT on TradingView
On the four-hour time frame, based on Binance Exchange data, PEPE’s price decline eased to $0.00000105 – $0.00000141 (Cyan). This zone is a bullish order block (OB) on the 12-hour chart, formed on May 12.
So far, the price reaction to the bullish OB has been positive since May 24, as evidenced by the lower candlestick wicks. It suggests that PEPE is seeing significant buying pressure at this level, which could make it a key demand zone for a likely price reversal.
However, the price is constrained by the trendline resistance (orange) on one side and the bullish OB on the other.
If the bulls hold trendline resistance, PEPE could try to rise to the 50% Fib level of $0.00000160. While such a move wouldn’t reverse all losses in May, it will have little impact.
Conversely, sellers could continue their scrutiny if trendline resistance persists. Such a move could ease PEPE at the 23.6% Fib level of $0.00000131 or $0.00000105.
Meanwhile, the OBV improved slightly, indicating low demand. The RSI also rose, but fell below the neutral level at the time of writing, indicating that buying pressure has eased.
Open interest rates remain low
Source: Coinglass
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Given declining open interest rates (OI), bulls may face more challenges in the near term. PEPE’s OI has fallen from over $80 million in mid-May to about $40 million in recent days. That translates to a 50% drop in OI, which could undermine a strong recovery and bullish momentum.
However, volume-weighted funding rates have been positive in recent days and may offer little hope to bulls, especially if BTC crosses $28k.
Source: Coinglass
