The “Swing Failure Pattern”: The Trap That Triggered the Correction
Yesterday’s 15% rally in PEPE was no coincidence, but the result of massive whale investment. One whale notably opened a long position worth hundreds of millions of dollars on Hyperliquid.
However, a “Swing Failure Pattern” (SFP) formed at the upper range zone. In concrete terms, the price briefly exploded above the top of its trading range, trapping short sellers who were betting on a continuation of the downtrend.
This false breakout triggered a massive liquidation of short positions, then to the downside in a violent trend reversal. 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 into the 6-hour Order Block and the top of the range, around $0.00000490, would represent an ideal short selling 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 bullish trend exhaustion. Moreover, with the FOMC meeting approaching, many traders are looking to reduce their risk (derisking), which could increase 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 rebounds in the short term before being rejected below the $0.00000490 resistance. 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 through the $0.00000490 resistance, the bearish scenario would be invalidated. In that case, the next major target for buyers is $0.00000550.
PEPE’s 15% explosion is a reminder of the volatility and opportunities offered by memecoins. However, the current euphoria could be short-lived. The confluence of major resistance, an Order Block, and a bearish CVD divergence suggests a reversal is likely. For traders, the $0.00000490 zone will be the deciding factor. Entering a short position in this zone, with strict risk management, could prove to be the most sensible PEPE trade of the week.
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