Pepe price gets extremely overbought: is a reversal coming?

Pepe Coin price continued its strong rally on Monday, reaching its highest level since January.

Pepe (PEPE), the third-biggest meme coin after Dogecoin (DOGE) and Shiba Inu (SHIB), jumped to a high of $0.00001535, up 180% from its lowest level this year. The rally occurred as its 24-hour trading volume surged to over $3.2 billion, higher than the combined volumes of Shiba Inu, Official Trump, and Bonk.

It also rose as demand in the futures market gained momentum, with open interest hitting a record high of over $662 million. This marks a significant increase from the March low of $165 million, when Pepe was in a prolonged sell-off.

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Pepe’s rally accelerated after last week’s Ethereum (ETH) breakout, which pushed ETH to $2,500 from last month’s low of $1,387. In most cases, ERC-20 tokens perform well when Ethereum is in a strong uptrend.

Like other cryptocurrencies, Pepe is being buoyed by renewed trade optimism after the US and China agreed to lower tariffs. The 145% tariff on Chinese imports will drop to 30%, while the 125% levy on US goods will be reduced to 10%. The two countries have agreed to continue negotiations aimed at improving bilateral relations.

A potential trade deal between the United States and China, and between the US and United Kingdom, opens the door for broader global trade deals. This has raised investor optimism that US inflation will ease, increasing the likelihood of Federal Reserve interest rate cuts.

Pepe price prediction

Pepe chart | Source: crypto.news

The ongoing Pepe Coin price surge is in line with what crypto.news predicted several times, including here, here, and here. These forecasts focused on the large falling wedge pattern that had formed on the daily chart. This pattern, defined by two descending and converging trendlines, typically signals a bullish breakout.

Pepe also formed a double-bottom pattern around the $0.0000057 level and has now moved above the neckline at $0.000009212. This double-bottom is a widely recognized bullish reversal formation.

However, one risk is that Pepe has become significantly overbought, with the Relative Strength Index rising to 84. Historically, such conditions often lead to brief pullbacks as investors take profits.

If this reversal happens, the next key level to watch will be at $0.000009212, the neckline of the double-bottom pattern, roughly 35% below the current price. A decline to this level would still be considered bullish, forming part of a ‘break-and-retest’ setup, which is a common continuation pattern.

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