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Assessing if Dogecoin is finally ready for a new price breakout on the charts
Dogecoin’s recent whale activity and bounce off a key support have raised questions about its potential to break out of its current downtrend. However, despite these positive signs, the cryptocurrency faces multiple challenges that could impede any significant price action.
DOGE recently bounced from a crucial support level around $0.25, indicating potential accumulation after recent pullbacks. This level has been important for Dogecoin in the past, which may suggest it will play a pivotal role in any future rally.
However, DOGE’s chart also shows a descending channel formation, implying that the market may still be leaning towards the bears. As of press time, the Relative Strength Index (RSI) read 37.93, indicating that Dogecoin is oversold and could potentially rebound in the short term.
Despite these technical indicators, declining network activity and negative Market Value to Realized Value (MVRV) long/short difference may signal a lack of conviction among market participants. This sentiment could contribute to prolonged periods of consolidation or even downward pressure on DOGE’s price.
Dogecoin’s derivatives market also painted a mixed picture. While open interest rose by 1.09%, the 24-hour volume fell by 29.33% to $1.88 billion. A decrease in volume and an increase in open interest could indicate uncertainty among traders, potentially hindering any breakout attempt.
In conclusion, despite recent signs of recovery, DOGE faces significant challenges that make it uncertain whether a new price breakout is imminent. Declining network activity, negative MVRV long/short difference, and reduced derivatives market participation all suggest cautious market sentiment. Therefore, while DOGE may experience short-term rebounds, breaking out of its current downtrend remains uncertain at best.
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Source: ambcrypto.com
