Dogecoin (DOGE) trading volume and network activity have dropped sharply, but a bullish pattern is emerging on the daily chart.
After a week of falling prices, Dogecoin is once again showing bullish momentum on the chart. However, this trend may change quickly, especially when Dogecoin's price action seems to repeat its historical cycle. Do investors need to be cautious?
Dogecoin historical pattern reappears
As the world's largest Dogecoin, DOGE experienced a 6% price correction last week, but the price rebounded by 3% in the past 24 hours. Although many people believe that Dogecoin is mainly driven by market sentiment and hype, in fact, the situation is not that simple.
Crypto analyst Ali Martinez recently pointed out that DOGE's current trend is similar to the trends in 2017 and 2020. At that time, after a sharp price surge, DOGE experienced a short-term correction and then continued to rise. These pullbacks usually occurred after DOGE's TD sequential indicator issued a sell signal.
Since this pattern has occurred twice in the past, the probability of repeating again in 2024 is high. Therefore, Martinez said that the current cycle may be testing investors' patience.
Will history repeat itself? As similar sell signals reappeared, market data showed that investors did increase their selling of DOGE. Data showed that DOGE's selling volume once approached 100, indicating a significant increase in selling pressure. However, the selling frenzy cooled as the indicator fell back to 12.
Meanwhile, multiple other indicators also showed bearish trends. For example, DOGE's trading volume has declined over the past 24 hours while the price has risen, suggesting a possible bearish reversal. In addition, last week's price pullback has caused Dogecoin's MVRV ratio to fall, indicating that more investors are losing money.
Whale activity has also decreased, with the number of whale transactions falling last week. Similarly, network activity has also been weak, with Santiment data showing a decrease in the number of daily active addresses for DOGE, reflecting a decrease in the use of Dogecoin.
Hope on the chart: Bullish pattern
Nevertheless, a bullish ascending triangle pattern is showing on DOGE's daily chart. Currently, Dogecoin is testing the resistance level of the pattern. If the bulls can successfully break through, DOGE may soon start a new round of sharp rise and is expected to move towards the target of $1.
