Pancake Swap (CAKE) Rally Eyes $3 After Key Level Breakout

Nearly $386 million worth of CAKE have exchanged hands in the past day – a figure that accounts for 42.5% of the token’s circulating supply.

The protocol reported that it burned nearly $1.3 million worth of CAKE last week as part of its regular fee burn. Meanwhile, trading volumes in May hit $100 billion and the month has not even ended yet. On a 30-day basis, they have already surpassed that mark and sit at $110 billion.

This is a huge milestone for a decentralized exchange. Among other DEXs, Pancake Swap has a 50% market share in the spot market with 24-hour trading volumes of $8 to $10 billion. Its closest rival is Raydium, the Solana-based DEX, with a 1% share.

Data from DeFi Llama also indicates that weekly volumes on Pancake Swap have surged by 132% to $64.7 billion as traders have apparently gone back to the market after Bitcoin (BTC) made a new all-time high.

CAKE Finds Strong Selling Pressure Near $3

Yesterday, we shared a price analysis for CAKE and emphasized that a bullish breakout of the $2.6 level will likely propel the token to the $3 area.

This breakout has occurred today with strong volumes. So, now what?

The price has pulled back after hitting $2.95. As the chart shows, there’s strong selling pressure at or near those levels and that makes this $3 target much more attainable as it will probably be retested at some point.

However, the market has already detected strong selling at that level, so bulls may opt to take some profits off the table and gather the necessary liquidity to retest it later on.

The token’s bullish structure is still intact and now a new “floor” in the uptrend has been built. Hence, the key support to watch in the next couple of days would be the $2.5 level.

The Relative Strength Index (RSI) has climbed to overbought levels already meaning that the trend is quite strong.

As the price approaches the $3 area, traders may expect significant volatility as CAKE hits this level. If bulls manage to break through, it could result in a significant climb possibly to the $4 area as this breakout could trigger a massive squeeze.

Key Areas to Watch for CAKE

Heading to a lower time frame, we can see that the rally started to subside after hitting this key area of resistance at around $2.9.

For now, as long as the second-best higher high ($2.5) holds, CAKE’s outlook will still be bullish. In fact, today’s American session could try another push to the $3 level to see if they can unlock additional liquidity by triggering a big volume of stop orders.

A sign of exhaustion at this point would be a bearish crossover between the 9 and 21-period exponential moving averages (EMAs) alongside a declining Relative Strength Index (RSI), which is already occurring.

There is a significant fair value gap (FVG) at the $2.5 level as well. So, paired with the psychological importance of this price level and its location as the next key area of support to watch, this would be the most likely landing zone for CAKE in case of a pullback.