Pudgy Penguins (PENGU) fall 12% just after one night: Is this the next breakdown?

Pudgy Penguins (PENGU), once one of the leading memecoins in the market, is now facing a sell-off as investors collectively exit their positions.

In just the past 24 hours, strong selling pressure has caused the price of PENGU to drop by about 12%, with the trading level recorded at the time of this article's publication being $0.0097. Not just PENGU, the entire memecoin market is also experiencing a significant downturn, with an average decline of about 27% in the past day.

PENGU encounters strong resistance

The recent decline of PENGU is mainly due to significant selling pressure as it enters a clearly established resistance zone on the technical chart. Typically, the sell-off in this region can become more severe depending on the amount of liquidity accumulated around the resistance area.

In the last instance when PENGU traded in this range, the price dropped by as much as 53%, marking a local bottom before recovering. However, when looking at the average of the three previous approaches to the resistance zone, the decline only stopped at around 31.7%, indicating a more moderate adjustment.

Source: TradingViewIn fact, a breakout beyond this resistance level is often a signal for the start of a broader uptrend. However, that breakout has not yet occurred, and PENGU is likely to have to seek the nearest support level before it can recover.

The uptrend loses momentum

The upward momentum in the market has weakened significantly, as reflected by two important technical indicators: Money Flow Index (MFI) and Parabolic SAR. Parabolic SAR helps identify the dominant trend of the market while also providing information about the positioning of traders.

At the present time, the Parabolic SAR dots appear above the price, signaling strong selling pressure and indicating that the price is likely to continue to decline in the near future.

Source: TradingView The MFI indicator provides a more detailed view of cash flow. Accordingly, the value range from 50 to 80 is the buying area, while from 30 to 50 is the selling area. Currently, MFI remains in the selling area, confirming the prevailing downtrend in the market.

However, the MFI line is showing signs of moving up into the buying zone, indicating that new capital is starting to return, although the level is still quite modest compared to the scale of capital that was withdrawn earlier.

Community interest declines

The community's interest in PENGU is also clearly declining. The Community Sentiment chart, which reflects the level of optimism or pessimism of investors towards the asset, shows a significant decrease in confidence.

If in the past, more than 90% of investors expressed optimism about PENGU, by November 30, this figure has sharply decreased to 72%. This data is compiled from 375,000 responses from investors.

Source: CoinMarketCapIn the derivatives market, investors have withdrawn around 6.5 million USD from positions related to Pengu as the situation worsens. When combined with the Funding Rate indicator, the trend of capital outflow remains evident, reinforcing the likelihood that downward pressure will continue in the short term.

Mr. Giáo