3 reasons why PancakeSwap (CAKE) may decline by 40% or more

PancakeSwap CAKE descending Triangle trendline
image from medium.com

Key Takeaways:

  • CAKE, the native token of PancakeSwap, the second-largest decentralized exchange (DEX) by daily trading volume, could decline by 40% or more in the upcoming sessions.
  • There are three technical reasons for the bearish prognosis, presented on the chart below.

YEREVAN (CoinCHapter.com) – PancakeSwap, a DEX on Binance Smart Chain, risks losing 40% on bearish technicals. Its token CAKE traded at $18.1 against USD in the Asian-Pacific session Tuesday and flashed a confluence of bearish factors on the daily chart, including two Descending Triangles.

#1 CAKE’s Falling trendline

PancakeSwap formed a falling trendline since it scored an all-time high of $47.6 on April 30, 2021. Since then, the price action retested the resistance several times, registering lower highs. Thus, the resistance remained instrumental in determining CAKE’s future bias, and it looks bearish as of publication.

PancakeSwap (CAKE) price could lose 40% on bearish technical setup.
PancakeSwap (CAKE) could lose 40% on a bearish technical setup. Source: CAKEUSD on TradingView.com
Also read: PancakeSwap's CAKE rallies 17.5% amid $151 million worth token burning event.

The digital asset has consolidated and moved sideways since registering a lower high of $26.9 in August. Moreover, CAKE formed a Descending Triangle that further confirms the short-term bearish prognosis.

#2 Descending Triangle

The bearish formation consists of a horizontal support line (purple on the chart above) and a falling trendline, similar to the one described above but smaller—the Descending Triangle’s resistance line formed in late August after registering the lower high of $26.9.

Also read: MoonX price rises over 650% weeks after debuting on PancakeSwap; what’s behind the rally?

During the previous two months, the price action moved sideways, retesting the resistance on multiple occasions. Once CAKE exhausts the Descending Triangle, it is likely to decline further, possibly retest a bigger Triangle’s horizontal support.

#3 Giant Descending Triangle

The Falling Trendline discussed above, together with the support bar at $11.0-11.8, creates another Descending Triangle that could see CAKE decline even further. The bigger Triangle’s support bar was instrumental in preventing breakdowns since March 2021 and was last retested on July 21, before the Bitcoin-led recovery across the market.

Should PancakeSwap’s token decline in the wake of exhausting the smaller Triangle, it could retest the support line again in Q4. The possible setback could lower the CAKE value by another 40% and bring it down to $11.8.

Also read: More opportunities for Bitcoin as the new Taproot upgrade enables smart contracts, privacy features. 

All three reasons together lead to believe CAKE could see a bearish phase ahead. As of publication, PancakeSwap’s token traded at $18.1 in the Asian-Pacific session Tuesday.

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