Supported by technical indicators and market sentiment data, the price of Dogecoin (DOGE) appears ready for a significant bullish reversal. Despite facing downward pressure recently, multiple factors suggest that this popular memecoin may experience an upward trend.
#1 Dogecoin Bounces From Key Support Level (1D Chart)
Crypto analyst CRG (@MacroCRG) emphasized the resilience of Dogecoin and another well-known memecoin, PEPE, stating, 'Both DOGE and PEPE have rebounded from important areas. In my opinion, the demise of memecoins has been greatly exaggerated. The next leg up will catch many off guard.'
CRG's technical analysis shows that despite immense selling pressure, DOGE has maintained above the key support level of $0.385 for nine consecutive days. Similarly, PEPE has also found key support, indicating that the 'memecoin season' may be making a comeback.
For Dogecoin, the short-term resistance zone at $0.42 remains a key level. CRG believes that breaking this threshold could signal the start of a new bull market, potentially catching many investors off guard.
#2 Bullish Market Structure (4-Hour Chart)
Crypto analyst Gonzo (@GonzoXBT) provided further technical insights, performing a technical analysis on Dogecoin's price action. Gonzo explained, 'Dogecoin 4H EMA100 -> acts as a resistance, 4H EMA200 -> acts as a support. Before we flip the 4H EMA100, we will be oscillating between the two, but we do not want to see it lose the 4H EMA200.'
This analysis highlights the importance of the 4-hour Exponential Moving Average (EMA) in determining short-term price trends. The 4H EMA100 currently acts as a resistance level, while the 4H EMA200 provides support. A sustained breakout above the 4H EMA100 may facilitate an upward breakout, while failure to maintain above the 4H EMA200 may lead to further consolidation or decline.
#3 Trading with the Masses
Crypto analyst Ali Martinez (@ali_charts) holds a different optimistic view on Dogecoin's short-term outlook. He noted, 'The market sentiment for Dogecoin has turned negative. It seems traders are becoming impatient during the ongoing price consolidation!'
Martinez's analysis based on Santiment data shows that both search volume and weighted sentiment have significantly declined. Specifically, the weighted sentiment has dropped to its lowest point since mid-October, while search volume has fallen to its lowest level since early November.
Martinez speculates that potential catalysts may quickly reignite positive momentum for Dogecoin, mentioning the establishment of a new U.S. government efficiency department under Elon Musk's leadership. He suggested, 'Or you could wait for the first hot action from the government efficiency department.'
#4 Liquidation Dynamics Indicate Potential Upside
Crypto analyst Carlos Garcia Tapia (@CAGThe3rd) adds another layer to the bullish argument, sharing insights on the liquidation heatmap from the past three days, commenting, 'FOMO longs just got liquidated on the 3D chart. DOGE.'
Coinglass's heatmap shows that over the past two days, a substantial number of leveraged long positions have been liquidated, concentrated between $0.393 and $0.385. However, there is a bullish warning: with most long positions now liquidated, remaining liquidation positions are around $0.42.
This setup suggests that Dogecoin may see bullish candlestick patterns, potentially triggering further liquidations of short positions and pushing prices higher. Why? Because liquidation heatmaps are a valuable tool for predicting price movements, as they reflect underlying market liquidity and leverage dynamics.
These heatmaps highlight the areas where traders are most susceptible to forced liquidations, acting as psychological and technical barriers. As prices approach these levels, large market participants can influence price direction by triggering a series of liquidations, amplifying the resulting price volatility.
As of the time of writing, DOGE is trading at $0.3843.