PancakeSwap’s native token, CAKE, recently experienced a notable 10% dip from its local highs, but despite this price pullback, bullish sentiment remains strong. The question on the minds of traders is whether this is just a temporary setback or a deeper correction, and whether now is the time to go long on the token.

Price Action and Market Sentiment

On March 26, 2025, CAKE saw an 11% drop from its recent peak, leaving traders to wonder if the trend would continue or if a reversal was in sight. While the bearish pressure resulted in a loss of the critical $2.55 support level, market indicators still suggest that the bulls are far from defeated. Over the past two weeks, CAKE has made significant gains, especially after a breakout rally on March 17, which saw prices surge with the highest daily trading volume in four months.

However, the strong upward momentum is currently being tested. As of the latest trading session, the market is retracing, and analysts suggest a further dip of up to 7% could be imminent in the short term. Despite this, there are solid reasons to believe that the overall trend could remain bullish as traders focus on key support zones for potential rebounds.

Key Technical Levels to Watch

PancakeSwap has been trading in a range since the start of 2025, between $1.37 and $2.94, with the mid-range level sitting around $2.16. This range-bound behavior suggests that CAKE is still in a consolidation phase, with traders waiting for a decisive breakout either to the upside or downside.

The most recent price action has shown CAKE testing resistance near the $2.85 mark over the weekend, where it was rejected. After the rejection, the price has begun a retracement, falling below the critical $2.55 support level. This has led some to speculate that the token might revisit lower levels, particularly around $2.16, which is seen as a strong support level based on the previous range formation.

Liquidation Heatmaps Signal Possible Reversal Zones

Traders are closely monitoring liquidation heatmaps for clues about where price action could find support and potentially reverse. The 1-month heatmap reveals a short-term range between $2.22 and $2.84, with a cluster of liquidity around $2.36, just below the current market price. This suggests that the market might see a short-term bounce if prices dip to this level.

Additionally, the heatmap shows another significant liquidity pocket at $2.22, which aligns with the lows from the previous week. This price point could act as a major support level, where bulls might re-enter the market and drive prices higher.

Given these levels, the $2.22 and $2.15 ranges are crucial for traders looking to go long on CAKE. If the price tests these levels and begins to show signs of a reversal—such as increased trading volume or a positive shift in momentum—then a bullish recovery could be in the works.

Bullish Indicators Still in Play

Despite the recent drop, some key indicators are still signaling that CAKE could continue its bullish trend. The On-Balance Volume (OBV) indicator has been steadily rising over the past two weeks, surpassing February’s highs. This suggests that buying pressure remains strong, even in the face of recent price fluctuations.

The Awesome Oscillator, a momentum indicator, also supports this optimistic outlook, showing that upward momentum has not yet waned significantly. While the current retracement may continue for a while, the overall trend is likely to remain positive as long as key support levels hold.

Conclusion: A Temporary Dip or a Larger Correction?

The recent 10% drop in PancakeSwap’s price might have rattled some traders, but the broader picture remains bullish. With key support levels at $2.22 and $2.15 in focus, there’s still a strong possibility that the market will see a bullish reversal if these zones hold. Liquidation heatmaps suggest that these areas are critical for a potential bounce, and a surge in trading volume could signal the start of a new upward move.

For traders looking to capitalize on the next potential rally, monitoring price action near these support levels could provide an opportunity to go long on CAKE. As always, patience and careful analysis of the market will be key to navigating the volatile world of cryptocurrency trading.