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PancakeSwap Still Running After Linea Update — Where Can CAKE End a Double-Faced 2023?

Last Updated November 6, 2023 1:01 PM
Nikola Lazic
Last Updated November 6, 2023 1:01 PM

Key Takeaways

  • CAKE increased by 135% from October 19.
  • It encountered a breakout during its significant descending resistance.
  • RSI signals overbought conditions, anticipating a retracement.

As PancakeSwap ‘s CAKE token sizzles in the crypto market, its recent launch on the Linea Mainnet has rekindled optimism. The first half of 2023 saw CAKE’s value dip, but the August 24 Linea update has added sweetness to its price.

With reduced trading fees, improved returns for liquidity providers, and enhanced capital efficiency, CAKE holders hunger for profits. As we move into the latter part of the year, a pivotal question emerges: Can CAKE rise to the occasion and finish the year strong, or will it crumble under market pressures?

In this in-depth technical analysis, we scrutinize CAKE’s price action, exploring potential scenarios for the months ahead.

CAKE Price Analysis 

CAKE’s price trajectory has been persistently downward, with a notable drop from its all-time high of almost $44 to an all-time low of $1. The emergence of a substantial descending triangle pattern typically signals the continuation of the prevailing bearish trend. However, a recent upturn that commenced on October 19, accompanied by a remarkable 135% surge, propelling it to a high of $2.50 on November 5, hints at a potential change in market sentiment.

Uptrend likely ended
Parabolic rise

The breakout from the descending resistance level is a classic bullish signal that may mark the onset of a new bull cycle for CAKE. However, the notably high Relative Strength Index (RSI) reading at 90% raises a cautionary flag. Such extreme RSI levels often precede a reversal or a significant pullback, indicating that the asset is overbought.

Given the rapid and steep nature of the recent price surge, the market may need time to consolidate these gains. A healthy bull cycle typically involves phases of correction and consolidation, where prices retracement to key support levels before resuming their upward trajectory. For CAKE, establishing a new support level following this breakout is crucial to affirm the sustainability of the bull cycle.

Investors and traders will be keenly monitoring signs of a potential pullback and the establishment of a higher low, which would further strengthen the bullish case. If CAKE can maintain support at levels higher than the previous lows within the descending triangle, it would provide additional confirmation of the potential for an ongoing uptrend.

CAKE Price Prediction

Taking a deeper look at PancakeSwap’s CAKE token through a 4-hour chart, a potential pivot in its recent price surge becomes apparent. The observed wave pattern closely adheres to the classic five-wave progression, a characteristic of Elliott Wave Theory. This alignment suggests that the uptrend may have either reached its peak or is poised to do so in the near future.

ABC correction to start shortly
Pullback now expected

While the possibility of a marginal price extension remains, concerns about the sustainability of the rally arise due to the lack of a robust support establishment phase. Rapid ascents without substantial consolidation often precede sharp corrections.

By applying the 0.618 Fibonacci retracement level to the current price, we anticipate a potential retracement to a support zone ranging from $1.60 to $1.40. This specific target area is not arbitrary; it is strategically chosen due to its proximity to a significant horizontal support zone and a descending resistance line that may come into play as the year progresses.

If CAKE successfully establishes itself within this support range and initiates a new upward trend, the early months of 2024 could witness the token challenging previous highs, possibly breaking through the $5 threshold. Such a move would not only validate the strength of the support but also signify a robust and bullish sentiment gaining momentum in the market.

Disclaimer

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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