The innovations that have been brought about Decentralized Finance (DeFi) technology are disruptive and are expected to take the financial industry to the next level. This is just the tip of the iceberg. The best has not been seen yet. Industry leaders such as Uniswap and PancakeSwap continue to advance their applications, increasing DeFi’s overall potential.
One of the projects that have been pushing the limits of DeFi is PancakeSwap whose value is projected to increase in value throughout 2023. It is a decentralized exchange (DEX) that lets users trade cryptocurrencies without the need to undergo KYC compliance procedures. Through the platform, investors can buy BEP-20 standard tokens, trade NFTs and stake cryptocurrencies, including the network’s native token CAKE.
The release of PancakeSwap (CAKE) V2 solidified the position of the project as a top DEX, with thousands of users investing in it daily. As such, the total value locked (TVL) on PancakeSwap has increased by 17% from $2.16 billion on January 2 to $2.53 billion on January 30. This reinforces the confidence investors have in the DEX, which is a positive sign for the project.
CAKE is up 26% year-to-date to the current price at $4 with potential for more upside as it trades above key support levels. It is believed that the CAKE price could rise throughout 2023 with more upgrades being planned toward the end of the year.
PancakeSwap Price Sealed In An Uptrend Targeting $5
CAKE’s price action over January has led to the appearance of an ascending parallel channel on the daily chart (see below). The uptrend had flipped all the major moving averages into support.
At the time of writing, the DEX token was trading within a significant supply zone stretching from $3.8 to $4.08 as indicated by the orange lines on the chart. Note that the price consolidated within this territory between November 24 and December 11, before tumbling 22% to $3.1.
The bulls have to ensure the price rises above this zone to sustain the uptrend. As such, a daily candlestick close above the upper limit of the zone at $4.08 would set the path for the PancakeSwap price to rise toward the $4.3 barrier and collect the liquidity above it.
Beyond that, the price may make a run-up to the $5 psychological level. This would constitute a 25% ascent from the current price.
CAKE/USD Daily Chart
The 50-day simple moving average (SMA) was facing upward and the relative strength index (RSI) was moving northward, a suggestion that the market still favored the upside. The price strength at 63 suggested that there were more buyers than sellers in the market who were focused on pushing the CAKE higher.
Conversely, a daily candlestick close below the immediate support at $3.9, embraced by the 200-day SMA, would initiate a trend reversal. If this happens, the price may drop to $3.8, where the lower boundary of the consolidation zone and the 100-day SMA appeared to converge.
Lower than that, a decline to the 50-day SMA at $3.5 or $3.12 would be the next logical move. These areas could offer safe breathing zones for buyers before they kick start another uptrend.
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