• Dogecoin price has shot up nearly 30% between May 1 and 4.
  • In the short term, DOGE could see another 15% rally to tag the $0.181 hurdle.
  • A correction after this impulse move could trigger a steep descent to retest the $0.116 level. 

Dogecoin (DOGE) price shows signs of a potential reversal on a higher timeframe picture. However, in the short term, it could trigger a quick impulse move to the upside. 

Also read: Dogecoin price bottom is in, but is DOGE ripe to buy amid tasty outlook among meme coins?

Dogecoin price at crossroads 

Dogecoin price created a lower low on May 1 relative to the March 20 swing low, signaling a breach of the ongoing bullish market structure. This development indicates that the market is in an uncertain state, which could reverse the uptrend or signal a bull market correction that resumes the ascent.

As a result of this market structure breach, two highly probable scenarios could unfold with DOGE in the coming days: a sweep of the $0.181 weekly resistance level followed by a correction to the $0.116 support floor or a direct descent to $0.116. 

The three-day Relative Strength Index (RSI) has dipped below the 50 mean level for the first time since February 24, and the Awesome Oscillator is also getting ready to slide below the zero mean level. Both the momentum indicators signal a waning of the bullish momentum on a high timeframe outlook. 

The reason for this downward trajectory forecast for Dogecoin price is due to a potential mean reversion play after a parabolic rally in March coupled with the liquidity resting below the equal lows formed just above the $0.116 support floor.

In the short term, or at least for the next couple of weeks, when Bitcoin’s outlook remains uncertain, investors can expect Dogecoin's price to slowly shed its market value. 

DOGE/USDT 3-day chart

DOGE/USDT 3-day chart

Also read: Top 3 meme coins Dogecoin, Shiba Inu and Bonk: Bitcoin gains could fuel recovery in DOGE, SHIB, BONK

DOGE’s on-chain metrics signal respite

IntoTheBlock’s Global In/Out of the Money (GIOM) index shows that 82.67% of investors are “in the money.” But the immediate support zone, extending from $0.152 to $0.143, is relatively small and unlikely to hold in case of a selling pressure spike. 

Therefore, the next key level is $0.116, where roughly 31 billion DOGE was purchased by 676,000 addresses. These investors are likely to buy more if the price comes down to their entry-level, thus serving as a support zone. 

GIOM also shows that the immediate resistance zone at $0.176 is also not that strong. So the clear hurdle or ceiling for DOGE bulls is between $0.182 and $0.671, where roughly 751,000 addresses that purchased nearly 13.5 billion DOGE are “out of the money.” These investors are likely to sell if DOGE hits their breakeven levels. Interestingly, the lower limit of $0.182 roughly coincides with the weekly resistance level at $0.181, making this confluence a level to watch should Dogecoin price climb higher.

DOGE GIOM

DOGE GIOM

Santiment’s 30-day Market Value to Realized Value (MVRV) ratio hovers just above the zero line after recovering from -20% on May 1. The recovery shows that investors who purchased DOGE in the past month were at an average loss of 20% and are now at breakeven. Negative values indicate that investors who purchased DOGE are out of the money and are less likely to sell. Often, long-term holders tend to accumulate assets during these capitulation events. Hence, a negative MVRV value is often seen as a buy signal.

Since May 1, Dogecoin price has inflated by nearly 30%, proving that the MVRV buy signal was a hit and that DOGE has more room for the upside. In the short term, DOGE could rise 15% and tag the $0.181 resistance level. 

DOGE 30-day MVRV

DOGE 30-day MVRV

While the outlook for Dogecoin price is dominantly bearish in the mid-to-high timeframe picture, it could catalyze an impulsive move higher in the short term. A decisive flip of $0.181 hurdle on the weekly time frame into a support floor would invalidate the bearish outlook. 

For this narrative to unfold, Bitcoin (BTC) needs to breakout of its ongoing consolidation phase and signal that altcoins can rally. Until that happens, DOGE’s uptrends are likely going to be short-lived due to the domination of the sellers.

Also read: Tesla updates payment methods to include DOGE, Dogecoin price rises 6%


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