PancakeSwap (CAKE) Pulls Back After 50% Surge — Next Support in Focus

Key Takeaways

• CAKE’s 50% weekend surge has weakened, with its price slipping 15% amid profit-taking and resistance.
• Indicators, including the MACD and CMF, indicate that the momentum around CAKE has turned bearish.
• A break below current levels could push CAKE toward $1.13—or even below $1 in a worst-case scenario

Over the weekend, CAKE, the native token of the multichain decentralized exchange PancakeSwap, surged by 50%. However, as of this writing, it has lost 15% of that increase.

This development comes as sentiment around cryptos linked to the BNB Chain rallied. However, as a new week begins, it appears that CAKE price might be unable to hold the rest of the again unless something else happens.

CAKE’s Rally Hits a Roadblock

On Saturday, Feb. 8, CAKE price was  $1.38. By the next few days, the cryptocurrency’s value had surged to $2.03.

The rise in CAKE’s value could be linked to the Test Token (TST) launch — a memecoin built on the BNB Chain-enabled token generation platform called “Four.meme.”

After Binance announced listing TST, demand for CAKE surged because the BNB Chain originally housed PancakeSwap. However, as of this writing, CAKE’s price is down to $1.67.

This decline happened due to profit-taking and rising selling pressure around the cryptocurrency. From an on-chain perspective, CAKE is unlikely to recover in the short term due to a major resistance of around $1.73.

According to the In/Out of Money Around Price (IOMAP), 435 addresses hold nearly 300,000 tokens in this region with unrealized losses. This is higher than tokens held in profits between $1.49 and $1.66.

Since the volume out of the money is higher, the altcoin might experience selling pressure once it hits the supply zone. The CAKE’s price could face an extended correction if this is the case.

CAKE Price Risks Extended Correction

From a technical perspective, the daily chart shows that CAKE’s price is falling back below the descending trendline after the false breakout.

Amid this decline, the Moving Average Convergence Divergence (MACD) struggles to hold onto a positive rating. The decline in the MACD reading indicates that the bullish momentum around CAKE is fading.

Like the MACD, the Chaikin Money Flow (CMF), which measures buying and selling pressure, has also declined.

This reinforces the bearish sentiment around CAKE. If sustained, CAKE’s price risks an extended decline. Furthermore, CCN observes that CAKE still trades below the 20- and 50-period Exponential Moving Averages (EMAs).

Typically, when the 20 EMA (blue) and 50 EMA (yellow) are below the price, it means the trend is bullish. However, the position indicates that CAKE’s uptrend has been invalidated in this case.

Hence, the cryptocurrency’s value might continue to slide. If this trend continues, CAKE could drop to $1.13.

The token’s value could sink below the $1 mark in a highly bearish scenario.

However, if demand for the altcoin rises again and bullish sentiment emerges, this might not happen. In that case, CAKE could rally to $3.27 at the 0.618 Fibonacci level.