The weekly 30% increase in Dogecoin's price may have pushed this altcoin into overbought territory, signaling a potential 12% pullback on the horizon.
During Sunday's trading session, Dogecoin's price dropped by 2% to $0.141. This slight decline follows a strong rally from the previous week, giving investors a chance to regain momentum. The recent price surge was driven by billionaire Elon Musk's mention of "#doge⚡ " during a Trump campaign event, suggesting that the rally might lack long-term sustainability.
Is Dogecoin Overbought After Its Weekly Rally?
The month of Uptober has returned to the crypto market, with leading digital asset Bitcoin racing toward $70,000. Among the top altcoins, #Dogecoin showed strong momentum, with its price rising from $0.103 to $0.145, marking a 42.2% increase.
Elon Musk's influence was the main driver of this rally after he mentioned "DOGE" during a Trump campaign event in Pennsylvania. Additionally, Dogecoin's price prediction shows a significant breakthrough of the resistance line in the symmetrical triangle pattern that has remained intact since August 2024.
The chart reveals a stable consolidation between two converging trendlines, which was expected to renew upward momentum. However, the price has moved too far from the exponential moving average, suggesting that buyers overextended the recovery trend, making a correction necessary.
As of today, DOGE is trading at $0.14, with its market capitalization rising to $20.68 billion. A potential correction could lead to a 12% decline, testing support around the $0.13 level.
SHIB MVRV Signals a Local Market Top
According to data from Santiment, the 30-day Market Value to Realized Value (MVRV) ratio has climbed to 14%, indicating that short-term traders are seeing profits. While this trend may suggest a bullish outlook, a positive MVRV ratio often coincides with a local market top, as traders tend to take profits during these periods.
This could increase selling pressure and trigger a short-term pullback before the market resumes its upward trend.
If Dogecoin's price manages to hold above the recent breakout, buyers could push the rally towards nearly $2, offering a 50% growth potential.
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