PEPE Bullish Divergence Hints at 40% Price Breakout Ahead

Key Takeaways

• The CMF on the PEPE 4-hour chart has broken above the downtrend, indicating rising buying pressure.
• On-chain data shows that user interaction with PEPE has increased, reinforcing the bullish thesis.
• Indicators like the MACD reveal bullish momentum and a golden cross to erase recent losses.

Frog-themed memecoin Pepe (PEPE) has had a catastrophic downturn in the last month. After rallying to $0.000028, the token has plunged 45% in the last 30 days.

This price decline has prompted traders to cut exposure aggressively, as with other market assets.

With multiple indicators flashing bullish signals, the question remains—how high can PEPE climb if this thesis holds?”**

Pepe Sees Shifts from Distribution to Accumulation

Since Feb. 4, PEPE’s price has been swinging between $0.0000089 and $0.000010. Today, it trades at $0.000091, indicating that it has bounced off the swing low.

But that is not the only thing noticeable on the 4-hour technical setup. As shown in the image below, PEPE’s price correction and consolidation led to a notable in the Chaikin Money Flow (CMF) reading.

The CMF is a technical indicator that measures the level of accumulation or distribution around a cryptocurrency. When the reading rises, it indicates accumulation while a drop signifies distribution.

On Tuesday, Feb. 18, the CMF reading was -0.25, indicating that PEPE was oversold. But as of this writing, the indicator has broken above that downtrend, suggesting rising buying pressure.

Although PEPE has yet to break past the $0.000010 resistance, the rising CMF alongside price movement signals a bullish divergence. If this trend continues, PEPE’s price will likely trade higher in the short term.

Is the Memecoin at a Discount?

CCN’s observation from an on-chain outlook also seems to support this bias. Specifically, we examined the price Daily Active Addresses (DAA) divergence.

As the name implies, the price DAA divergence compares the market value of an asset to the user engagement on its network. With this, one can tell if the asset has flashed a buy or sell signal.

For many weeks, PEPE’s price DAA divergence was negative, indicating decreasing user participation as the price fell.

However, as seen above, the metric is positive, indicating that the memecoin has presented a buy signal. Should user engagement continue to rise, PEPE might experience a sustained uptrend like the 4-hour analysis revealed.

PEPE Price Looks to Break Resistance

Moving on, the daily chart aligns with the bullish thesis. Notably, the Moving Average Convergence Divergence (MACD) reading is positive.

This indicates bullish momentum. Looking at the MACD, the 12-day Exponential Moving Average (EMA) — in blue has crossed above the 26 EMA (orange). This position is called a golden cross and validates the buy signal presented in the 4-hour timeframe.

If the MACD reading remains positive and the golden cross solidifies, PEPE’s price might break above the 0.786 Fibonacci level, which is a major resistance point.

Once confirmed, the next target for PEPE could be $0.000013, representing a 40% hike from its current level. Should buying pressure intensify, the memecoin could rally to $0.000016.

On the flip side, if the token fails to rise above the overhead resistance, this prediction might not come to pass. Instead, PEPE’s price might crash to $0.0000077.