The Dogecoin (DOGE) price seems poised for a notable bullish reversal, underpinned by technical indicators and market sentiment data. Despite facing recent downward pressures, several factors indicate a possible upward trajectory for this popular memecoin.
Dogecoin Bounces Off Key Support Level (1D Chart)
Crypto analyst CRG (@MacroCRG) has highlighted Dogecoin’s resilience alongside PEPE, another prominent memecoin. He stated, “DOGE + PEPE both bouncing from important areas. The memecoin demise is greatly exaggerated IMO. The next leg up gonna take many by surprise.”
According to CRG’s technical analysis, DOGE has successfully closed above the critical support level of $0.385 for nine consecutive days, even amid significant selling pressure. This persistence, coupled with PEPE maintaining crucial support, suggests that the “memecoin season” could be making a strong comeback.
Breaking the Resistance Zone
For Dogecoin, the short-term resistance zone at $0.42 remains a pivotal level. CRG posits that surpassing this threshold could herald the beginning of a new bull run, potentially taking many investors by surprise.
Bullish Market Structure (4-Hour Chart)
Further insights come from crypto analyst Gonzo (@GonzoXBT), who provides a detailed breakdown of Dogecoin’s price action. Gonzo explains, “DOGE 4H EMA100 -> acting as resistance, 4H EMA200 -> acting as support. Until we flip 4H EMA100, we will just chop in between, don’t want to see it lose 4H EMA200 though.”
This analysis highlights the crucial role of the 4-hour exponential moving averages (EMAs) in determining short-term price movements. Currently, the 4H EMA100 acts as a resistance level, while the 4H EMA200 offers support. A sustained move above the 4H EMA100 could facilitate an upward breakout, while failure to maintain above the 4H EMA200 might lead to further consolidation or decline.
Trading Against The Crowd
Crypto analyst Ali Martinez (@ali_charts) offers another bullish perspective on DOGE’s immediate outlook. He notes, “Market sentiment for Dogecoin has turned negative. It seems as if traders are getting impatient during the ongoing price consolidation!”
Martinez’s analysis, based on Santiment data, indicates a sharp decline in both search volume and Weighted Sentiment. Specifically, Weighted Sentiment has dropped to its lowest point since mid-October, while search volume has fallen to levels not seen since early November.
He speculates on potential catalysts that could quickly reignite positive momentum for Dogecoin, referencing the establishment of the new US Department of Government Efficiency under Elon Musk. Martinez suggests, “Or you can wait for the first POPULAR action of the Department of Government Efficiency.”
Liquidation Dynamics Indicate Potential Upside
Adding another layer to the bullish thesis, crypto analyst Carlos Garcia Tapia (@CAGThe3rd) shares insights into the liquidation heatmap over the past three days, commenting, “FOMO longs just got liquidated on the 3D chart. DOGE.”
The heatmap from Coinglass shows a significant liquidation of leveraged long positions clustered between $0.393 and $0.385 over the past two days. However, there is a bullish caveat: with most longs now liquidated, the remaining liquidation cluster is positioned around the $0.42 mark.
This setup suggests that Dogecoin could experience a bullish candle formation, potentially triggering further liquidations of bearish positions and propelling the price upward. Liquidation heatmaps are valuable tools in forecasting price movements as they reflect the underlying market liquidity and leverage dynamics. These heatmaps highlight where traders are most susceptible to forced liquidations, acting as psychological and technical barriers.
At press time, DOGE traded at $0.3843.
