The Swing Failure Pattern: The Trap That Triggered the Correction
Yesterday’s 15% surge in PEPE wasn’t random, but the result of massive whale investment. One whale notably opened a long position worth approximately one hundred million dollars on Hyperliquid.
However, a Swing Failure Pattern (SFP) formed at the upper zone of the range. Specifically, the price briefly exploded above the top of its price range, trapping short sellers who were betting on a continuation of the downtrend.
This false breakout triggered a massive liquidation of short positions, followed by a sharp reversal in a violent trend change. It’s a perfect example of how the market can create liquidity by trapping traders.
The Short Opportunity and Bearish Divergence
Despite this show of strength, several signals call for caution. The price should now find temporary support in the middle of its range, around $0.00000443. However, the real danger zone for buyers lies higher. A return to the 6 hour Order Block and the top of the range, around $0.00000490, would represent an ideal short opportunity.
This bearish scenario is reinforced by a bearish divergence on the 6 hour CVD indicator. While the price reached a new high, the momentum indicator marked a lower high.
This is a classic sign of exhaustion in the uptrend. Moreover, with the FOMC meeting approaching, many traders are looking to reduce their risk (derisking), which could amplify selling pressure at key resistance levels.
Upcoming Scenarios: Correction or New High?
The trading plan for PEPE is therefore twofold:
- Bearish scenario (most likely): The price bounces in the short term before being rejected below the resistance at $0.00000490. The target would then be a return to the bottom of the range, or even lower, to seek liquidity.
- Bullish scenario (invalidation): If buyers surprise the market and manage to break the resistance at $0.00000490, the bearish scenario would be invalidated. In that case, the next major target for buyers sits at $0.00000550.
PEPE’s 15% explosion is a reminder of the volatility and opportunities that memecoins offer. However, the current euphoria could be short lived. The confluence of major resistance, an Order Block, and a bearish CVD divergence suggests that a reversal is likely. For traders, the $0.00000490 zone will be the moment of truth. A short position entry in this zone, with strict risk management, could prove to be the wisest trade of the week on PEPE.
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