Key Takeaways:
- Apecoin faces a head and shoulders formation on the daily chart.
- The target for APE stands 25% lower than the current value.
- The upcoming token unlock on Mar 17 could exacerbate selloff fears.
YEREVAN (CoinChapter.com) – The price of ApeCoin token APE has dropped 9% in a week and was trading for around $4.8 on March 6. It may continue falling in the coming weeks due to the formation of a classic bearish reversal pattern.
ApeCoin Prints Head and Shoulders
The ApeCoin token has entered the breakdown stage of its head-and-shoulders (H&S) pattern. Notably, the H&S pattern is confirmed when the price forms three consecutive peaks at a mutual support level (neckline). The middle peak, called the “head,” is typically higher than the other two, called the “shoulders.”
The H&S pattern typically breaks below its neckline during its correction upon forming the third peak. In doing so, and by the rule of technical analysis, the pattern’s breakdown leads the price to the level at length equal to the maximum distance between the head’s topmost level and the neckline.
APE’s price has trended within the context of the H&S pattern since January 2023. the ApeCoin token now eyes a continued downtrend toward $3.5, down 25% from the current prices, by March 2023.
Also read: Apecoin (APE) price is up 65% YTD, but on-chain metrics see a looming plunge.
The dropping trading volumes on the chart above testify to the bearish expectations.
However, APE’s price action retested a significant support line (dashed line), relevant since Nov 2022. Considering the dwindling trading volumes, Apecoin bulls would have to double down if they hope to keep the token from sliding below the support.
APE Token Unlock Scheduled for March 17
ApeCoin will undergo a scheduled token unlock on March 17, according to its official announcement.
Also read: Bitcoin Week Ahead Ep24: Powell Testimony, Jobs Data, and a BTC Price Crash Below $20K.
Notably, the coin’s network will release 40 million APE tokens with a current worth of around $200 million on the said date. That is more than 4% of the total ApeCoin supply, which risks increasing selloff risks in the market if the demand drops simultaneously.
The selling pressure caused by token unlocks can lead to a drop in the token’s price, as there may be more sellers than buyers in the market for a short time. In this case, the sudden increase in supply due to the unlocks can cause a significant price drop.
admitted the Apecoin team.
However, the team assured investors the drop would be short-lived, as not all 4% of the tokens would be sold. Additionally, the team claimed there was no price drop during the first 30 million APE-unlock in Sep 2022, and “there is enough demand for the coin.”
The staking pool for $APE is set to decrease from 35m to 30m in the middle of March. This means that staking $APE will result in a lower APY, which is something to consider.
also noted the team.
