Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The lower timeframe price action of Dogecoin favored the bears.
- The lack of volatility in the market showed that a violent move could be brewing.
Dogecoin [DOGE] has trended downward from $0.08 since 31 July. This was a lower timeframe downtrend, as the meme coin had a bullish price structure on the higher timeframe charts such as 3-day and 1-week.
The possibility of Elon Musk incorporating Dogecoin into his social media platform could lead to a wild rally. But this scenario was uncertain and its timing could be entirely dependent on Mr. Musk’s whims.
The bearish bias was building strength despite the lowered volatility in August
The market structure of DOGE was bearish on both the daily and the 4-hour price chart. On 1 August, the price fell below the $0.076 higher low that Dogecoin bulls had previously set. In doing so, the outlook shifted bearishly. Moreover, this level was retested as resistance on 5 August.
The bulls failed to break through. A set of Fibonacci retracement levels (yellow) were plotted based on the recent move down. The 23.6% and 61.8% extension levels are confluent with horizontal significant levels at $0.07 and $0.066. These levels have been important for Dogecoin traders since early July.
The RSI showed bearish momentum was in place but weakening over the past few days on the H4 chart. The OBV also clung to a support level from mid-July. DOGE sellers have not yet been strong enough to decisively push prices lower. However, the CMF was sinking lower, and its reading of -0.1 showed heavy capital flow out of the market.
The Dogecoin short-term charts showed the selling pressure was slowing down
The Open Interest chart showed a strong spike of close to $30 million on 5 July. At that time, DOGE bounced from $0.073 to $0.076. While it showed speculators were ready to bid, the spot buyers were unable to drive a rally any higher.
This was reflected in the spot CVD, which has remained flat since 5 August. However, considering it was in a downtrend in the previous week, this could be a sign of the beginning of buyer strength.
Yet, buyers must be wary. To the south, the demand zone at $0.07 has been a significant area since May. A bullish reaction from this zone was likely, although heavy Bitcoin losses could see DOGE fall beneath this area.
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