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The frog-themed memecoin project PEPE has been trading within a descending wedge formation since May 27. Currently priced at $0.0000077, the token’s value has dropped by 52% during this period. PEPE’s price may fall further as it appears ready to drop below the lower line of the descending wedge formation, signaling a continuation of the downtrend.
What is Happening with Pepe?
A descending wedge formation occurs when an asset’s price moves between two downward-sloping trend lines. The upper trend line acts as resistance, while the lower trend line serves as support. Despite the downtrend within the wedge, this formation is generally considered bullish because the price usually breaks above the upper trend line upon completion, leading to an upward movement.
However, PEPE might be an exception. Since August 25, the memecoin’s price has dropped by 15%, approaching the lower line of the descending wedge formation. When an asset’s price falls below the lower trend line of the descending wedge, it typically invalidates the bullish process associated with this formation and indicates a continuation of the downtrend.
PEPE’s technical setup supports this possibility. The altcoin is trading below both its 20-day exponential moving average (EMA) and 50-day simple moving average (SMA), falling below significant moving averages. The 20-day EMA reflects an asset’s average price over the last 20 trading days, while the 50-day SMA tracks the average closing price over the last 50 days.
Additionally, PEPE’s Relative Strength Index (RSI) remains below its neutral line and has been in this position for most of the past month. The RSI measures whether an asset is overbought or oversold. At a level of 43.13 and declining at the time of writing, PEPE’s RSI level indicates low buying activity among market participants.
PEPE Chart Analysis
The bearish trend surrounding PEPE is further evidenced by its negative weighted sentiment, currently at -0.76. A weighted sentiment value below zero indicates that the overall online conversation about the asset is predominantly negative. This negativity typically signals a continued decline in the asset’s price.
If PEPE bulls cannot defend the lower line of the descending wedge, the memecoin project’s price could drop to its August 5 low of $0.0000059, representing a 28% decline from its current value. However, if the current trend reverses and PEPE resumes an upward trend, its price could rise to $0.0000086.
