Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- CAKE broke past a severe resistance level at $1.3.
- A retracement could provide a buying opportunity.
PancakeSwap [CAKE] was in a prolonged downward trend in October, but soon began to turn its fortunes around. Prices shot past the $1.3 resistance that had existed since August in early November.
A technical analysis from AMBCrypto dated October 25 showed that CAKE was in a long-term downtrend, but a move above $1.3 would be the first sign that bulls were gaining control. This happened and CAKE reached $2.5, a level it was trading at earlier in May.
The confluence of multiple factors showed where bulls could go long
Source: CAKE/USDT on TradingView
The most recent lower high on the one-day chart was $1,179, which was broken on October 23. On the same day, the RSI, which had been firmly below the neutral 50 for months, climbed above the neutral 50.
As previously highlighted, the $1.3 level was a significant resistance level for CAKE. So when the bulls managed to break through this resistance, the chances of a strong rally increased.
Last week’s rise to $2.5 was accompanied by heavy buying volume, as reflected in On-Balance Volume. The Chaikin Money Flow (CMF) also showed high capital flow to the market with a value of +0.27.
CAKE’s Fibonacci retracement levels (light yellow) showed the 61.8% and 78.6% levels at $1.6 and $1.36, respectively. There was a bullish breaker block (cyan box) at $1.6-$1.8 over a one-week period.
Furthermore, the fair value gap (FVG), indicated by the white area on the daily chart, coincided with the breaker block, which marked this region as a solid support zone.
Short-term sentiment favored bears, but accumulation was underway
Source: Santiment
Weighted sentiment fell back into negative territory after a brief foray above zero on November 4, suggesting that social media engagement was not as positive as the price action for CAKE.
On the other hand, the MVRV ratio climbed to highs not seen since June 2021. This could lead to longer-term holders selling some of their tokens at a large profit. The average coin age has been on an increasing trend since early July. Therefore, addresses continued to collect more CAKE.
Source: Coinalyse
Read PannenkoekSwap [CAKE] Price forecast 2023-24
Coinalyse’s lower timeframe data showed selling pressure taking control over the past three days. The Open Interest (OI) has fallen slowly but steadily over the past 24 hours, along with prices.
The spot CVD has been falling since November 5, and CAKE prices also started trending lower since November 6. Therefore, the near-term OI and spot CVD suggested that there could be a downside move for CAKE amid the selling pressure.