In the recent price action of Dogecoin [DOGE], a pattern resembling a double bottom emerged on the price chart, indicating a looming uptrend. Nonetheless, the technical indicators and liquidation levels suggested the likelihood of a short-term consolidation phase.
What direction might the prominent meme-inspired cryptocurrency take next?
Dogecoin Strengthens its Position within the Local Demand Zone
Utilizing a set of Fibonacci retracement and extension levels based on the previous rally in November, specific price levels were identified. Notably, the $0.143 level, a prior peak from July, served as a critical support after being breached. Within the local demand range hovering around $0.36-$0.38, levels at $0.272 and $0.215 were recognized as significant support zones.
Presently, a descent towards these levels seems improbable. The Relative Strength Index (RSI) dipped to 53, reflecting a subdued bullish momentum in the daily timeframe. Despite this, the index remained above the neutral threshold of 50, indicating that buyers were in control.
Observing the On-Balance Volume (OBV), it surpassed the previous peaks of DOGE during its upward trajectory in November. A breach below these levels in OBV could introduce a bearish bias. As of the latest data, signs pointed towards relatively weak selling pressure prevailing.
Liquidation Heatmap Suggests a Neutral Momentum Stance
An analysis spanning over 3 months highlighted a concentration of liquidation levels around $0.485 and $0.355. Interestingly, the latter coincided with the local demand region and may be revisited in the near term.
Further down, an accumulation of liquidity was observed at $0.34, posing as potential price attractors driving downwards movement.
Upon closer inspection of the liquidation heatmap, it was evident that the liquidity at $0.395 and $0.425 levels was notably high. With the daily chart lacking momentum and a standoff between buyers and sellers, a short-term consolidation phase for Dogecoin seemed probable.
A breakout above $0.43 in the ensuing days could indicate a potential retest of the $0.50 level on the horizon. Conversely, a slip below $0.395 and $0.355 might pave the way for a substantial and prolonged corrective phase for DOGE.
Disclaimer: The contents presented do not serve as financial, investment, trading advice, and purely represent the author’s perspective.