Dogecoin has increased in price by nearly 150% in just the last 4 days. This upward trend has not yet experienced a significant correction, but technical indicators show that a downward price correction is likely.
To Report Cointelegraph, the price of Dogecoin has made a stunning jump in recent days and was influenced by the purchase of Twitter by Elon Musk, the main sponsor of this coin meme. Only on October 29 (November 7), the price reached its all-time high of $0.15 with a growth of 75%; A jump that is the highest daily growth of Dogecoin since April 2021 (April 1400).
As you can see from the image above, the rapid and unprecedented jump of Dogecoin in the last two days is actually the continuation of an upward trend that began on October 25 (November 3). In total, this meme coin has grown almost 150% from October 25 to 29.
This price growth naturally caused a sharp increase in the volume of Dodge transactions. According to data from the analytics platform Sentiment, this was accompanied by an increase in the number of transactions above $100,000 on the Dogecoin network. The status of both of these indicators indicates an increase in demand for Dogecoin among wealthy investors or so-called whales.
The bullish jump among key indicators related to DogeCoin reflects investors’ excitement over the finalization of Elon Musk’s purchase of Twitter. At the beginning of 2022, this famous billionaire proposed the idea of using Dogecoin as a payment method to buy a special Twitter subscription, or Twitter Blue. It should be noted that SpaceX and Tesla companies, both of which operate under the leadership of Elon Musk, have already started accepting Dogecoin for some of their products.
Shiba Inu also follows Dogecoin
Shiba Ino, the second largest meme coin in the digital currency market, has experienced a price jump in recent days, following Dogecoin, albeit on a smaller scale.
The price of this digital currency increased by 30% only on October 29 (November 7) and reached its highest level since August 2022 at $0.00001519. The recent upward trend of Shiba Inu, like Dogecoin, started on October 25 (November 3) and ended with a 53% jump by October 29.
In addition to Shiba Inu, other meme coins in the market have also had a relatively large price growth, and among them, the name of Dogelon Mars (Dogelon Mars) attracts attention with a jump of 140% in 4 days.
The Dogecoin market is oversold
Moving away from the excitement of the recent jump, it seems that the growth of this meme coin in recent days has been too long, and the technical indicators also confirm this issue.
The relative strength index or “RSI”, which is used to determine overbought and oversold price areas, has reached the level of 93.96 in the one-day view of the Dogecoin market. This point is the highest level of the RSI index since April 2021 (April 1400); A month before the Dogecoin price reached its all-time high of $0.75.
The market being in a situation of oversaturation does not necessarily mean a rapid change in the price phase from rising to falling, but it can be said that it reflects the increase of emotional buying in the market; An event that sooner or later will stabilize or correct downwards Dogecoin.
During the bear market between 2018 and 2020, Dogecoin experienced similar price movements in its weekly chart. It should be noted that after reaching its all-time peak at $0.0194 in January 2018, it experienced a 95% drop in 2 years.
Dogecoin’s 2018-2020 correction took place in a bearish channel. In July 2020 (July 2019), the resistance or ceiling of this descending channel was broken upwards, but after that, this upward jump was followed by a limited and transverse price fluctuation until December 2020 (November 2019). The fluctuation range was between $0.0022 (zero Fibonacci level) and $0.0054 (0.236 Fibonacci level).
Dogecoin’s current bear market is shorter in time than the bear market between 2018 and 2020, but in appearance (breaking the ceiling of the bearish channel), it has followed a similar trend. This means that Dogecoin may continue to fluctuate between zero and 0.236 Fibonacci retracement in the range of $0.055 to $0.176.
In other words, there is a possibility that the price of Dogecoin will fall to the level of $0.055 by the end of this year; A level that is about 60% lower than the current prices.
On the other hand, if the uptrend continues and the 0.236 Fibonacci retracement level is completely broken, $0.25 will be the next upside target for this meme coin.