PENGU Surges 10% Amid Market Lull — But Here’s Why a Pullback Could Be Looming

Meme coin PENGU has emerged as today’s top crypto market gainer with a nearly 10% surge over the past 24 hours. This rally comes amid a broader lull across the crypto market, where major assets have struggled to gain traction.

However, despite the bullish momentum, technical indicators suggest buyer fatigue may be setting in, raising the risk of a short-term correction in PENGU’s price.

PENGU Faces Resistance and Bearish Bets

Between May 14 and June 26, PENGU traded within a descending parallel channel, struggling to gain upward momentum. A breakout followed, leading to a price rally now pushing the altcoin toward its May 14 high.

However, technical and on-chain readings suggest that buying pressure may be losing steam, and PENGU risks a pullback in the short term. For example, the token’s Relative Strength Index (RSI) is 72.16 at press time, indicating that PENGU is overbought and could witness a reversal.

The RSI indicator measures an asset’s overbought and oversold market conditions. It ranges between 0 and 100. Values above 70 suggest that the asset is overbought and due for a price decline, while values under 30 indicate that the asset is oversold and may witness a rebound.

At 72.16, PENGU’s RSI shows the altcoin in the overbought territory. This suggests that the buying pressure may be unsustainable in the short term, increasing the likelihood of a pullback or price consolidation as momentum cools. 

Moreover, the token’s aggregated funding rate across the derivatives market has remained significantly negative over the past few days. This is a sign that bearish sentiment is growing among leveraged traders. At press time, PENGU’s funding rate is -0.0005%.

Funding rate is a periodic fee exchanged between long and short traders in perpetual futures markets to keep prices aligned with the spot market. 

PENGU’s persistently negative funding rate indicates that short positions dominate, signaling a potential pullback as traders brace for a downturn.

This, combined with gradually building buyers’ fatigue, points to a possible PENGU price correction over the next few days.

PENGU Eyes Breakout but Risk of Correction Grows

At press time, PENGU trades at $0.0160, just below the resistance at $0.0170. If profit-taking begins, the meme coin could witness downward pressure toward $0.0137. 

Should this support floor fail to hold, PENGU’s price could slip further to $0.0128.

Conversely, if demand strengthens, PENGU could break above the $0.0170 resistance. A successful breakout may open the door to $0.0175, a level last seen before its downtrend began on May 14.