Recently, Dogecoin [DOGE] has experienced an increase in social sentiment and a rise in social media engagement. These factors have the potential to drive bullish price action. However, currently, there is a strong presence of sellers dominating the market.
DOGE retested its support level at $0.09136 in July, indicating a possibility of further downward movement, according to technical analysis.
Identifying Next Targets Using Fibonacci Extension Levels
Observing the daily chart, Dogecoin has been approaching the $0.09136 support level again in the last couple of weeks, indicating a reinvigorated downtrend. The Relative Strength Index (RSI) briefly entered the bearish territory after crossing above the neutral 50 level.
The -DI (red) and the ADX from the DMI indicator both exceeded 20, signaling a strong ongoing downtrend. The low trading volume during the recent attempted price recovery highlights a lack of market conviction in August.
Although the weekly and daily patterns are beginning to align, the Fibonacci extension level at $0.07162 could potentially be the next target for DOGE if the support at $0.09136 is breached.
Insights from Exchange Netflows and Spot Markets
Examining the exchange netflow data for the past three months, a total of 35.15 million DOGE outflows were recorded in the last month, amounting to $3.211 million in accumulation. While this figure may seem relatively small compared to Dogecoin’s market cap of $13.7 billion, it contributes positively amidst the prevailing selling pressure.
While some investors transferred their tokens out of exchange wallets, creating a slight bullish sentiment, others remained inclined to sell. The spot Cumulative Volume Delta (CVD) exhibited a consistent decline over the past two weeks as prices steadily decreased.
The Open Interest remained stagnant within the $340 million to $360 million range. The recent price drop on August 6 led to an increase in Open Interest, signaling short-selling activity and a bearish outlook.
Disclaimer: The analysis provided is the writer’s personal opinion and does not serve as financial, investment, or trading advice.