Pendle (PENDLE), a decentralized finance (DeFi) token currently valued at a $700 million market cap, has recently shown promising signs of bullish movement. Over the past few weeks, Pendle’s price recovery from its long-term range low of $2.2 has fueled renewed optimism among traders. However, despite its potential, Pendle faces several hurdles before it can aim for the coveted $7 mark.

Pendle’s Recent Price Action: A Market Structure Shift

At the time of writing, Pendle is trading around $4.28, just shy of key resistance levels. On the 3-day chart, Pendle made a significant shift in its market structure, having broken above the bearish order block at $3.64. This breach marked a change from a bearish outlook to a bullish one, making the market sentiment more favorable for the token.

This structural shift came after Pendle had bounced off the $2.2 range low, which has been its lowest price point for over 18 months. The range in which Pendle has been trading stretches from $2.22 to $7, with the mid-range resistance level pegged at $4.62. As of now, Pendle is heading toward this mid-range resistance. While this signals a positive price movement, there are still major challenges ahead.

Resistance Levels: $4.62 and Beyond

The $4.62 resistance is an important level to watch, as it represents the midpoint of Pendle’s established range. If Pendle manages to surpass this resistance, the next potential targets for price action are $4.5 and $4.62, levels that could open the door to higher prices.

However, despite the breakout above the $3.64 level, trading volume over the past month has decreased. This could indicate that momentum is stalling, which presents a potential risk for traders looking for sustained gains. While the OBV (On-Balance Volume) has continued to trend higher, suggesting bullish dominance, the reduced trading volume remains a red flag. This lower volume could indicate that the current rally may not have the fuel to continue beyond the mid-range resistance unless external catalysts intervene.

Volume and Momentum Indicators: A Mixed Signal

Pendle’s bullish momentum is further confirmed by the rising OBV on both the 3-day and 4-hour charts. The OBV, a technical indicator used to assess buying and selling pressure, has continued to climb, pointing to increased bullish dominance in the market. At the same time, the Money Flow Index (MFI) on the 3-day chart is nearing 80, signaling that buying pressure is still in play. However, it is important to note that the MFI has yet to form any bearish divergence, which could weaken the bullish outlook.

The 4-hour chart also indicates bullish momentum, with Pendle showing an ascending channel formation. This pattern further supports the likelihood of a continued rise in price, although a short-term dip may occur. A retracement to the $4.2 level could be seen as a healthy pullback, allowing the price to retest the mid-channel support before resuming its upward movement.

Liquidity Pockets and Price Movements

One of the most crucial factors in determining Pendle’s price trajectory is liquidity. The 2-week liquidation heatmap reveals two pockets of liquidity that will likely influence Pendle’s price action. A small pocket exists around $4.2 to $4.23, and another significant liquidity zone is at $4.5. These liquidity zones act as magnets, drawing the price toward them, and could help propel Pendle to new heights if they are targeted correctly.

However, these liquidity pockets may also pose risks, especially in the event of significant price drops. If Pendle were to dip into the $4.2 to $4.23 range, it could test the demand around these levels before bouncing higher. Meanwhile, the $4.5 to $4.55 region represents a more attractive target for traders looking to capitalize on the price movement.

Is Pendle Poised for a $7 Rally?

For Pendle to achieve its ultimate target of $7, it will need to clear several key resistance levels. The first significant hurdle is the $4.62 mid-range resistance, which must be breached for a sustained rally to take shape. Traders will also be watching the liquidity zones closely to gauge how the price reacts at these levels.

In addition to technical resistance, Pendle’s future price action will heavily rely on overall market sentiment. With Bitcoin (BTC) nearing new all-time highs, the broader cryptocurrency market is experiencing a bullish sentiment, which could spill over into altcoins like Pendle. If the market continues to show strength and trading volumes pick up, Pendle could continue its bullish trend.

Final Thoughts: Cautious Optimism

Pendle is showing some strong signs of bullish movement, but its journey toward $7 depends on a combination of factors. Overcoming the $4.62 resistance is crucial, and the price must maintain its bullish momentum without falling into a liquidity trap. While the current market conditions are favorable, traders should remain cautious of potential short-term retracements and reduced volume. If Pendle can continue to rally and hold key support levels, the $7 target could become achievable by year-end.

In conclusion, Pendle’s price could rally to $7, but the road ahead requires overcoming resistance, sustaining momentum, and navigating liquidity challenges. For now, traders should keep a close eye on the token’s price action and adjust their strategies accordingly.