CAKE Faces Rejection at $2.95, Correction Likely
Key Takeaways
- CAKE, the token of PancakeSwap, was rejected at USD 2.95 – a significant resistance level.
- After a rapid 22% increase, the price dropped by 5.6% in just 11 hours.
- Analyses indicate a possible correction toward the midpoint of the current price range at USD 2.16.
- Liquidity data suggests increased selling pressure between USD 2.70 and USD 2.20.
- An upward breakout remains possible – depending on Bitcoin’s price development.
Resistance at USD 2.95 – What Does It Mean for You?
The price of CAKE, the native token of the decentralized exchange PancakeSwap, recently tested the upper boundary of a five-month trading range at USD 2.95. However, this area turned out to be a strong hurdle. Immediately after reaching this level, the price dropped significantly within a few hours. Such rapid movements often indicate so-called “liquidity sweeps” – the targeted triggering of stop-loss orders to absorb liquidity.
Price Range Provides Orientation
CAKE has been trading for months within a clearly defined range between USD 1.37 (lower boundary) and USD 2.95 (upper boundary). The midpoint of this range is around USD 2.16 – an area that has repeatedly acted as support or resistance in the past.
Most recently, the price rose from this level but failed several times at the resistance of USD 2.50 before finally breaking through to USD 2.95. However, the quick correction that followed shows the market is not yet ready for a sustainable breakout.
Technical Indicators Show Mixed Signals
A look at the technical data paints a nuanced picture:
- On-Balance Volume (OBV): The OBV indicator, which measures buying volume, has been rising since April – a sign of continued interest.
- Money Flow Index (MFI): With a value of 67, the MFI is in bullish territory but not yet overheated.
- 4-Hour Chart: The rejection at USD 2.95 is clearly visible. A possible support level may now lie at USD 2.56.
Liquidity Data Suggests Possible Correction
Data from Coinglass shows a high concentration of liquidation levels between USD 2.70 and USD 2.20. Particularly notable: the levels at USD 2.61 and USD 2.28 could be short-term targets for bearish market participants.
These zones act as magnets for the price, as many stop-loss orders are placed there. Should the price continue to decline, a return to the midpoint of the range at USD 2.16 is likely.
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What Could Reverse the Trend?
One external factor could strongly influence the price trend: Bitcoin. If BTC reaches a new all-time high in the coming days, it could shift sentiment across the entire crypto market – including for CAKE. In that case, a breakout above the USD 2.95 mark would be entirely possible.
Until then, however, caution is advised. The current structure suggests a correction rather than an immediate breakout.
Our Assessment
The rejection at USD 2.95 is no reason to panic, but it is a clear warning signal. The current market situation indicates a consolidation or even a correction toward USD 2.16. Anyone keeping a long-term eye on CAKE should monitor this development closely.
Entering at the current level is risky. It’s better to wait for new signals – such as clear support at USD 2.56 or stabilization around USD 2.16. Only a sustained breakout above USD 2.95 would confirm the bullish scenario.
Sources
- TradingView
- Coinglass
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