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PancakeSwap (CAKE) Bounces But Yet to Confirm Bullish Reversal

PancakeSwap (CAKE) is showing several bullish signs, but has yet to confirm its bullish reversal. A movement above the $12.50 area is required in order for the reversal to be confirmed.

CAKE has been falling since reaching a high of $26.60 on Aug 26. The decrease has been contained inside a descending parallel channel, which is normally considered a corrective pattern. This means that an eventual breakout from it would be expected. The downward movement continued until a low of $10 was reached on Dec 4. 

The low served to validate both the $11.50 horizontal support area and the support line of the channel. Since then, the token has been moving upwards. 

The upward movement was preceded by bullish divergence in the RSI, an occurrence that often precedes such upward movements. Since then, the indicator has attempted to move above 50 but failed. Such movements are considered signs of a bullish trend. 

Furthermore, the MACD is moving upwards and is nearly positive. Therefore, technical indicators are showing several bullish signs but have yet to confirm the bullish trend reversal. 

Alongside the MACD crossing into positive territory, CAKE has to reclaim the middle of the channel in order for the reversal to be confirmed.

Chart By TradingView

Short-term breakout

Cryptocurrency trader @Thebull_crypto tweeted a CAKE chart, which shows that the token has broken out from a descending wedge.

Source: Twitter

Since the tweet, CAKE has broken out from the descending wedge. Afterwards, it proceeded to reach a high of $13.37 on Dec 27.

However, it has been falling since and is barely attempting to hold on above the $12 horizontal area. 

There are some bullish reversal signs in place, such as the bullish divergence in both the RSI and MACD (green lines).

Therefore, it is likely that CAKE will increase towards the $12.50 resistance area. However, until it manages to break out above this area, the short-term trend cannot be considered bullish. A movement above this area would also cause a reclaim of the long-term channel.

Chart By TradingView

CAKE/BTC

The CAKE/BTC chart is still bearish. The token has been following a descending resistance line since Aug 23 and has fallen below the 3600 satoshi horizontal area. The area is now expected to act as resistance. 

The closest support area is at 1825 satoshis. It is created by the 0.786 Fib retracement support level and a horizontal support area. 

It is possible that CAKE will bounce after reaching this level. A breakout from the descending resistance line would indicate that the short-term correction is complete.

Chart By TradingView

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here

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