Key Takeaways
PancakeSwap failed to breakout past the 7-month range, and the price action following the rejection showed that bears were dominant. Despite this, a price bounce to $2.7 or even $2.95 was possible.
PancakeSwap [CAKE] saw a 2.83% price bounce on Sunday, the 3rd of August. However, its short-term trend was bearish after the failed breakout past $2.95 toward the end of July.
This failure saw the price retrace back into the range that is just over 7 months old.
The native token of the decentralized exchange on the BNB Smart Chain did not inspire bullish confidence, even though it was trading at the $2.55 support zone.
Bitcoin [BTC] appeared to have found some buying pressure at the $112k mark, but it was unclear if it could begin a recovery.
Bitcoin’s price movement in the coming days would likely influence CAKE’s trajectory, which at press time appears bearish.
Sellers are in the driving seat
Source: CAKE/USDT on TradingView
CAKE dropped below the swing low it made on the 1-day timeframe on the 24th of July. This move below $2.535 (white) signified a bearish market structure break.
It signaled further losses were likely, although a price drop might or might not be imminent.
The A/D indicator also made a new low compare to the past two months to underline heavy selling pressure in recent days. The MACD made a bearish crossover to capture the shift in momentum in favor of the sellers.
Source: CAKE/USDT on TradingView
A deeper price drop might not be imminent because the $2.55 level marked the 25% level of the 7-month range.
As such, it was a relatively notable support level, and has given PancakeSwap traders a bounce over the past 24 hours.
However, the trading volume has been dwindling over the past 48 hours. The market structure on the H4 chart was also bearish, although a move past $2.67 could usher short-term gains.
Source: CoinGlass
The liquidation heatmap showed a good chance of a price move toward $2.7. The price bounced from the liquidity cluster at $2.5 over the weekend, and was close to the magnetic zones at $2.7 and $2.8.
Further north, the $2.95 and $3.05 levels were the next resistances to watch. At press time, the technical indicators and the price action did not suggest a price move beyond $2.6 could materialize.
If it does, traders need to beware a larger price bounce, even though the 1-day market structure was bearish.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
