There has been a notable increase in positive sentiment surrounding Dogecoin (DOGE) recently, reflected in its heightened activity on social media platforms. This surge in sentiment could potentially trigger a bullish trend in the price action. However, the current scenario indicates a strong influence from sellers.
DOGE revisited its support level at $0.09136 in July, and technical analysis suggests the possibility of further declines.
Identifying Next Milestones with Fibonacci Extension Levels
Observing the daily chart, Dogecoin has been approaching the $0.09136 support level again in the last couple of weeks. This period also witnessed a resurgence in the downtrend’s strength. The Relative Strength Index (RSI), after briefly surpassing the neutral threshold of 50, shifted towards a bearish stance.
The -DI (red) and the ADX from the DMI indicator both exceeded 20, indicating a robust downward trend. The trading volume remained low during the price recovery attempts, indicating wavering confidence throughout August.
Despite this, convergence between the weekly and daily structures is emerging. If $0.09136 fails to hold, the Fibonacci extension level at $0.07162 could become the next focal point for DOGE.
Insights from Exchange Netflows and Spot Markets
An analysis of exchange netflow data for the past three months revealed 35.15 million DOGE outflows, amounting to $3.211 million in accumulation. While this accumulation may seem modest in the context of a $13.7 billion market cap asset, it is noteworthy amidst the prevailing selling pressures.
Although some traders moved their tokens out of exchange wallets, indicating a willingness to hold, others remained inclined towards selling. Additionally, the spot Cumulative Volume Delta (CVD) exhibited a consistent downward trend in the past fortnight in tandem with price declines.
The Open Interest remained stagnant within the $340 million to $360 million range, but experienced an uptick during the recent price dip on August 6. This uptrend could signify increased short-selling activities and bearish market sentiment.
Disclaimer: The views expressed in this article are opinions and should not be construed as financial, investment, or trading advice.