Dogecoin: down 12% could be a buy signal
The price of Dogecoin (DOGE) has started to show signs of life. The prospect of recovery makes the memcoin an attractive asset to buy
The price of Dogecoin (DOGE) fell along with the entire crypto market, wiping out the gains of the last 20 days. However, the popular memcoin is now starting to gradually recover, making it an attractive asset to buy.
Is it time to buy Dogecoin
The recent drop in Dogecoin's price has turned out to be a hidden blessing for DOGE investors. The market to realized value ratio (MVRV) shows that this decline has moved the memcoin into the accumulation zone.
The MVRV ratio shows investors' gains and losses. Right now, the 7-day MVRV for Dogecoin is -4.9%, indicating losses and fading selling pressure. When DOGE's MVRV is between -4.9% and -14.9%, it traditionally signals the start of a recovery rally. Such a moment represents a favorable buying opportunity.
However, the question arises whether adding DOGE to the portfolio at the current price will be profitable. This is answered by the Sharpe ratio, which measures the risk-adjusted return on an investment given volatility. A high Sharpe ratio indicates an attractive risk-to-reward ratio. Right now, the Sharpe ratio on the weekly chart is 9.55%. This is the first positive value of the indicator since the beginning of the month.
DOGE Forecast: coming out of consolidation
Dogecoin's price has held below resistance at $0.108 for most of the month, lost in the process of falling 12%. If accumulation begins, the coin will have a chance to rise above $0.109. If this barrier is taken, DOGE could start rising towards the next resistance level at $0.118. This will help the asset to get out of consolidation.
On the other hand, if the breakout fails or the market goes into a bearish trend, the price risks falling below $0.108. This would bring DOGE back into consolidation and cancel the bullish outlook.
