Pepe price forms a frightening pattern, recovery at risk

Pepe Token Price Surges in High-Volume Trading

Pepe (PEPE), the third-largest meme coin by market capitalization, has experienced a significant price increase over the past two days in a high-trading volume environment. As of Wednesday, Pepe was trading at $0.0000081, up by over 38% from its lowest point on Monday.

Recovery Patterns and Market Sentiment

Pepe's price movement has mirrored that of other tokens such as Stacks (STX), Bonk, and Solana (SOL), which have also formed a "hammer pattern," a bullish reversal signal in technical analysis. Pepe has also recorded the highest trading volume among meme coins, reaching over $1.43 billion, exceeding Dogecoin's (DOGE) $1.03 billion and Shiba Inu's (SHIB) $356 million.

Potential Risks

Despite Pepe's recovery, several key risks remain:

• Low Futures Open Interest: Pepe's futures open interest stands at $71 million, significantly lower than its July peak of over $141 million.
• Bearish Chart Patterns: Pepe has formed bearish chart patterns, including a head and shoulders pattern, which could limit its recovery potential.
• Crossover Pattern: Pepe remains below its 50-day and 100-day Simple Moving Averages, which have formed a bearish crossover pattern.

Elliott Wave Invalidation

Pepe may have invalidated the impulsive Elliott Wave pattern by failing to complete its fifth wave. This could potentially signal a trend reversal.

Conclusion

Pepe's price recovery faces potential headwinds due to low futures open interest, bearish chart patterns, and its position below key moving averages. A break below $0.0000058 could indicate further downside pressure.