ApeCoin (APE) is appearing to be exhausted and is starting to bounce off a long-term weekly support line. It has been under selling pressure for months.
APE has been making lower highs over the past few weeks which is creating a possible bounce to the $0.55 mark. The past week’s price movement has shown less volatility around the lower boundary of a descending channel.
Each week’s candle is closing tighter than the previous week. This indicates a loss of power by the sellers and can lead to buyers taking control. This loss of power typically occurs before tokens make a rally from a protracted downtrend.
Defense Of Support Indicates Buyer Interest
Jonathan Carter stated in his analysis that APE is currently in the process of defending a historically sensitive support zone. Carter believes each time APE defends this zone, it is a sign that more buyers are accumulating more of the token.
The likelihood of APE continuing its slide to new lows is decreasing by the day. Carter points out that price is still in a long-term descending channel.
However, the downward pressure on APE is decreasing close to the bottom of the descending channel, supporting a recovery scenario. Carter stated that recovery scenarios usually start slowly. Hence, he expects to see stabilization in the token’s price followed by slow and steady upward moves.
Source: X
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$0.55 Becomes Major Level of Resistance
The $0.55 level will become the most likely upside target for APE. It coincides with the 50-exponential moving average on the weekly charts.
The 50 EMA has consistently contained all of APE’s rebounds since the downtrend began. The $0.55 area is near a major mid-point retracement from the last downtrend. In addition, prices tend to react to such areas during correction rallies.
EMA. Source: TradingView
ApeCoin Is Building A Base
The momentum indicators are starting to indicate support for the recovery scenario. The Relative Strength Index (RSI) is hovering in oversold territory on the weekly charts, indicating that selling pressure may finally be diminishing.
The MACD histogram is also showing a decrease in bearish momentum as the bars are getting smaller. These types of conditions typically occur before a short-term relief rally develops.
Neither of the momentum indicators is indicating a trend reversal, but they are showing signs of diminishing bearish pressure. Therefore, they are both supporting the idea of a short-term recovery.
MACD and RSI. Source: TradingView
ApeCoin needs to continue to hold the support zone it is currently trading in order to maintain this recovery scenario. The condition of the general cryptocurrency market will dictate how high the token will rise if the market becomes more bullish. Improved market sentiment could provide enough strength for the token price to test higher resistance zones.
Also Read | ApeCoin (APE) Approaches Critical Support: Is a Reversal to $5.90 on the Horizon?
