Analysis
Dogecoin: Assessing whether a breakout is coming soon
The early January price drop from $0.094 to $0.075 was used to plot a set of Fibonacci retracement levels that traders could keep an eye on.
- Dogecoin faced some resistance below the $0.09 mark in the past few days.
- The lack of buying volume suggested bulls were not dominant and a breakout was not yet close by.
Dogecoin [DOGE] noted steady gains over the past ten days. A recent AMBCrypto report noted that a significant amount of DOGE was moved to Robinhood, a centralized exchange. This fueled fears of selling pressure.
DOGE has a bullish bias based on the 12-hour price chart, but it faced resistance from a Fibonacci retracement level. Could the bulls achieve a breakout soon?
Examining the Fibonacci levels
Source: DOGE/USDT on TradingView
The early January price drop from $0.094 to $0.075 was used to plot a set of Fibonacci retracement levels (pale yellow). It showed the 78.6% and 61.8% levels at the $0.09 and $0.087 levels have served as resistance throughout 2024.
The market structure has been bullish following the gains made in February. The RSI has been above neutral 50 in the past ten days to highlight buyer dominance. However, the OBV did not agree with this finding.
The recent highs made were marked in orange on the OBV indicator. At press time, the reading was not ready to climb above the levels marked. This was a sign that buyers, despite the gains made in February, might not have the strength to break the resistance at $0.09.
On-chain metrics point toward weakened sentiment
Source: Santiment
While DOGE trended higher in February, its weighted sentiment has trended lower. It remained in the negative territory for the majority of February. The active addresses count has also decreased dramatically over the past two weeks.
Realistic or not, here’s DOGE’s market cap in BTC’s
termsTogether, it suggested that demand for Dogecoin might not be high enough to establish an uptrend beyond $0.09. The dormant circulation did not see notable spikes recently.
A large spike would be a sign that imminent selling pressure was likely.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
