What To Know
- Pump.fun surges over 35%, breaking out of a bullish falling wedge pattern.
- RSI spike signals strong buying pressure, boosting Pump.fun’s rally momentum.
- Overbought RSI and declining long/short ratio hint at possible trend reversal.
The market condition recently turned slightly bullish as most cryptos managed to paint their charts green. But, Pump.fun was in the limelight as it displayed tremendous performance over the last seven days.
Ergo, let’s decode what allowed PUMP to achieve this and the possibilities of the token sustaining this massive bull rally going forward, or will it face a correction soon.
Pump.fun Bulls Aren’t Letting Bears Enter The Market
Pump.fun’s (PUMP) performance last week drew considerable attention from traders and analysts after the token witnessed an impressive 35%+ price surge. At the time of writing, PUMP was trading at $0.005832, with its market capitalization climbing above $2.06 billion, cementing its position as one of the more talked-about assets in the meme coin segment.
A closer look at the 4-hour chart of Pump.fun by CryptoMoonPress reveals several key bearish factors preceding this rally. PUMP, after a severe drop in recent weeks, managed to stabilize its price into a parallel channel for months of strong consolidation. This consolidation has served as a base to provide fresh bullish momentum, thus keeping it from any further danger of downward pressure.
The real shift came on September 1, when PUMP successfully broke out of a falling wedge pattern—a well-known bullish reversal formation. This breakout not only marked the end of the correction phase but also ignited the rally that fueled nearly 40% weekly growth. Once the breakout was confirmed, market sentiment improved, and buyers entered aggressively, pushing the token higher.
This bullish outlook was also backed by technical indicators. Relative Strength Index saw a spike along with the price, highlighting an increase in buying pressure. An increased RSI would typically symbolize a rise in demand, which helps maintain the ongoing rally or kicks in the beginning of a fresh one.
These things combined with the breakout from the falling wedge and strong consolidation inside the channel created a perfect family for a PUMP surge, placing this token in a spotlight to watch over the coming weeks.
Will This Trend Continue?
Though the last few days aligned in investors’ interest, the bears might soon take over the market as a few technical indicators hinted at a trend reversal. For instance, after a sharp increase in the RSI. The indicator entered the overbought zone. This typically results in a rise in selling pressure and in turn pushes a token’s price done.
On top of that, Coinglass’ data revealed that Pump.fun’s long/short ratio also registered a sharp decline in the 4-hour time frame. To be precise, a decline in the crypto long/short ratio means fewer traders are taking long (bullish) positions relative to short (bearish) positions, indicating a shift towards a bearish sentiment in the market. This can suggest that traders are expecting the underlying asset’s price to fall or that a previous bullish trend may be weakening.
In a Nutshell
Meaningful advances like Pump.fun’s recent rally further underlined the strong potential for meme-driven assets when properly recharged by key technical breakouts and subsequent demand surges. Breaking out of the falling wedge and consolidating within the parallel channel gave bulls enough positive reinforcement to push higher in PUMP from which handsome weekly returns were garnered.
Having said that, there were some cautionary signs appearing already. The entry of RSI into the overbought region hints at rising sell pressure in the near future, while the declining long/short ratio is evidence of dwindling bullish conviction. The momentum of Pump.fun will be either sustained or pulled back in the short term, depending on the movement in these indicators. For now, PUMP continues to be one of the most sought-after tokens in the market.
