Dogecoin is Showing Potential For a Bullish Breakout Despite Low Trading Volume and Whale Activity
A falling wedge pattern has recently appeared in the price movement of Dogecoin, indicating a potential upcoming bullish activity. Despite a dip in price over the past week, the daily chart still shows a bullish structure, suggesting the possibility of continued upward movement. However, the low trading volume presents a significant obstacle to potential price increase.
Throughout the month, Dogecoin has maintained a consistent bullish market structure, with no new lower lows. The Relative Strength Index (RSI) has remained above the neutral 50 mark, signalling the potential for further upward momentum. Despite this, the trading volume has consistently remained low, even during price increases, reflecting weak conviction among market participants as indicated by the lukewarm response on the On-Balance Volume (OBV) during July and a recent decline.
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It is crucial to evaluate Dogecoin’s future price movements based on critical support and resistance levels. The $0.119-$0.123 range acts as critical support, while the $0.139-$0.143 range serves as significant resistance. Retesting the $0.12 support level could create a buying opportunity for traders considering the overall bullish daily structure. Maintaining these levels is vital for sustaining Dogecoin’s upward momentum.
Overview of the Investment
An analysis of investment behaviour reveals that the average age of dollars invested in Dogecoin is increasing, suggesting that long-term holders are retaining their coins. Historically, a decrease in this metric aligns with strong upward trends observed in previous market cycles. Additionally, the 90-day Market Value to Realized Value (MVRV) ratio shows that Dogecoin is currently undervalued, reducing the likelihood of significant selling pressure from profit-seeking holders. However, data on whale accumulation indicates that large holders began selling off their holdings after a brief accumulation phase in early July, indicating a lack of confidence in a sustained rally.
Conclusion
In summary, Dogecoin’s market structure remains bullish, with the potential for upward movement. However, obstacles such as low trading volume, significant resistance levels, and whale selling activity may hinder its progress. Investors should closely monitor these factors and consider the support and resistance zones for strategic entry and exit points. Additionally, general market sentiment, particularly its correlation with Bitcoin, will significantly influence Dogecoin’s future trajectory.
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Meet Daniel Abang: Crypto guru, content creator, and analyst. With a deep understanding of blockchain, he simplifies complex concepts, guiding audiences through the ever-changing crypto landscape. Trusted for his insightful analysis, Daniel is the go-to source for staying informed and empowered in the world of cryptocurrency.
