- Dogecoin price could undergo consolidation as it is stuck between two demand barriers.
- Transactional data shows underwater investors at $0.624 could hinder an upswing.
- A spike in large transactions worth more than $100,000 hints at a continuation of this downtrend.
Dogecoin price is facing a stiff resistance wall that could result in a minor correction. A confluence of on-chain indicators adds credibility to this potential bearish move.
Dogecoin price awaits a clear trend to establish
On the 4-hour chart, Dogecoin price shows a 47% downtrend after tagging an all-time high at $0.704 on May 8. The resulting pullback sliced through the immediate area of interest ranging from $0.518 to $0.576, flipping it into a resistance level. But the meme coin found support on the next barrier that extends from $0.397 to $0.451.
As a result, Dogecoin price rallied 43% higher only to face blockade at the former level. Now, investors can expect DOGE to consolidate between these levels before buyers/sellers take control and break out of the confinement.
Dogecoin price could likely tag the resistance level at $0.611 before it retraces 26%. Hence, investors must keep a close eye on this barrier.
DOGE/USDT 4-hour chart
Adding credence to this downtrend is IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model, which shows a cluster of underwater investors around $0.624. Here, roughly 50,000 addresses that purchased 9.12 billion DOGE are “Out of the Money.”
Therefore, a short-term spike in bullish momentum could be shut down as market participants who might want to break even might off-load their holdings, adding selling pressure.
Moreover, the lack of support levels below the current price shows that a bearish move is likely.
DOGE IOMAP chart
Moreover, transactions worth $100,000 or more have spiked from 1,120 to 6,860 over the past month. This 476% increase, which acts as a proxy to whale’s investment interests and often such a rapid increase, potentially aligns with a local top, further confirming the bearish narrative.
DOGE large transaction chart
While things seem to be looking down for Dogecoin price, the number of new addresses joining the DOGE blockchain has increased from 33,000 to 99,0000 since April 9. This 217% growth in new users joining the network indicates that market participants are interested in the meme-themed cryptocurrency at the current price level.
DOGE new addresses chart
Therefore, a sudden spike in buying pressure that leads to a decisive close above $0.611 will signal an increase in short-term bullish momentum. However, a breach of $0.704 will invalidate the bearish scenario and kickstart an 8% upswing to new highs at $0.766, coinciding with the 216% Fibonacci extension level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.