The Pancake Swap (CAKE) is approaching the end of a neutral short-term pattern. Whether it is a breakout or a downtrend can determine the direction of the future trend.
The CAKE was declining below a descending resistance line since August 2021. The downside momentum led to a June 2022 low of $2.48.
The price has been rising since then and managed to break out of the line next month. At the time of the breakout, the line was up for 336 days. Breakouts from such long-term formations are usually catalysts for substantial growth.
However, that has not happened here, as the cake has barely risen above its breakout level. Moreover, the weekly RSI is yet to break out of its descending resistance line (black line). This would be needed to confirm a bullish trend reversal.
If there is an upward move, the nearest resistance area will be at $10.
current cake pattern
DeFi Platform @horizonprotocol Tweeted a chart of the cake showing a symmetrical triangle that has been in place since May.
The symmetrical triangle is considered a neutral pattern, which means it can lead to both a breakout and a breakdown. The price is approaching the point of convergence between resistance and support, so a decisive movement is expected soon.
Technical indicator readings are mixed as the daily RSI is correcting at the 50 line, indicating a neutral trend.
However, the indicator is still following an ascending support line (green) and making higher lows. As long as the line remains, the validity of the bullish structure remains.
Furthermore, this possibility is reinforced by the fact that the cake broke above a long-term resistance line before becoming trapped in a triangle.
If there is a breakout, the next nearest resistance will be at $5.80. Conversely, a break below the support line of the channel is likely to take CAKE to a new yearly low.
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