However, technical indicators suggest that Dogecoin’s rally may be losing momentum with a potential pullback on the horizon.
The price of Dogecoin is currently overbought
The price of Dogecoin has increased by 7% in the last 24 hours. However, during the same period, its trading volume decreased by 33%, confirming a gradual loss of interest (at least in the short term) for the same coin.
When an asset’s price rises but trading volume declines, it indicates weakening rally momentum. Lower trading volume during a price rise means that fewer investors are buying after the price has just risen. As a result, this suggests reduced demand. From now on, nothing could support this sustained rally.
Additionally, DOGE/USD daily chart data shows that the altcoin has been overbought and is awaiting a pullback. The cryptocurrency’s Relative Strength Index (RSI) is the first indication that this can be seen. Currently, the indicator value is 92.86. This is the highest value since March.
RSI measures the overbought and oversold conditions of an asset in the market. The values of this indicator oscillate between 0 and 100. Values above 70 indicate that the asset is overbought at the moment and awaiting a probable correction. Conversely, values below 30 suggest that the asset is oversold and could see a rebound.
An RSI of 92.86 for DOGE indicates that it is significantly overbought. Thus, a price correction would be inevitable in the short term.
Price prediction: an imminent fall below $0.30?
The DOGE price is currently located above the upper band of its Bollinger Bands indicator. This could confirm the possibility of a short-term price decline.
The Bollinger Bands indicator measures market volatility and identifies potential buy and sell signals. It has three main components: the middle band, the upper band, and the lower band.
When the price of an asset exceeds the upper band, it suggests that the asset may be overbought. Traders interpret this as a signal of potential downward pressure and a good opportunity to sell and lock in profits.
DOGE is currently trading at $0.389. Once the price correction begins, DOGE will likely test support at the $0.38 level. However, if the buying pressure is weak and the bulls cannot hold this line, the cryptocurrency could drop sharply to $0.31.
At this point, additional selling could push the price down even further, to $0.25.
If demand strengthens, the Dogecoin price rally could reach $0.43, which is currently its peak for the current bull cycle. In the best case scenario, its price could rise to $0.47. A level that has not been seen since 2021.
Disclaimer
Disclaimer: In accordance with The Trust Project guidelines, this price analysis article is intended for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased information, but market conditions may change without notice. Always do your own research and consult a professional before making any financial decisions.
