Dogecoin (DOGE) has experienced a 20% decline in value over the past week, leading to a current trading price of $0.264 and a market capitalization of $39 billion. Despite the dominance of bearish market sentiment, the extreme price fluctuations that characterized Dogecoin’s trading activity recently have subsided, ushering the memecoin into a phase of consolidation.
Although lingering bearish pressures persist, signs of a potential breakout from the consolidation phase have started to emerge. Notably, there is a concentration of liquidation orders positioned just above the current price level of DOGE, creating a zone of attraction that could potentially propel the memecoin to higher price levels.
Examining Dogecoin’s Liquidation Heatmap
By evaluating Dogecoin’s liquidation heatmap over the past 24 hours, a notable cluster of liquidation orders stands out at the $0.272 price level. If DOGE manages to surpass this threshold, numerous short sellers could face liquidation risks, leading to a cascade of buying activity as these positions are closed.
Furthermore, recent liquidation events affecting long positions have effectively cleared out liquidation clusters situated below the current price range. This reduction in liquidation risks, coupled with a positive shift in Funding Rates according to Coinglass, signifying a willingness among long traders to pay short traders to sustain their positions, allude to a prevailing bullish sentiment encompassing Dogecoin’s market.
Is a Breakout from Consolidation on the Horizon for Dogecoin?
Observing Dogecoin’s hourly chart reveals the memecoin’s current consolidation phase. DOGE is currently endeavoring to breach the midline of this consolidation channel, albeit accompanied by relatively low trading volumes. A crucial level to overcome for a potential breakout is the resistance at $0.272, coinciding with the short liquidation zone, with a successful breach likely triggering an upward trend.
The Relative Strength Index (RSI) displays a gradual resurgence in buying interest, evidenced by a rise to 52. The RSI line maintaining an upward trajectory above the signal line signals a bullish momentum in the short term. Despite these positive indicators, the contracting Bollinger bands suggest that volatility remains subdued, potentially confining DOGE within the current consolidation boundaries until a surge in buying pressure materializes.
Mood of Traders: Still Bullish on Dogecoin
Data sourced from Coinglass indicates that a significant proportion, 77%, of traders on the Binance exchange have opted for long positions on Dogecoin, with a mere 22% engaging in short plays. This overwhelming preference for long positions suggests that traders anticipate a bullish breakout in the near future, highlighting a persistently bullish sentiment surrounding DOGE.
This prevailing optimism surrounding Dogecoin underscores the potential for a breakout from the ongoing consolidation phase should buyers enter the market, paving the way for a possible upsurge in value.