Dogecoin (DOGE) Price Recovers But Struggles Against Bears
- WBOYOriginal
- 2024-08-08 06:42:401097browse
Dogecoin's price has started recovering along with the wider crypto market after the last few days of financial chaos.
Dogecoin (CRYPTO: DOGE) price began recovering together with the broader crypto market after the last few days of financial chaos. But it is early days to call the bottom for DOGE prices, especially considering the bearish market sentiment.
The memecoin saw a dramatic drop in the closing days of July 2024, which lasted till Aug. 6 when the buy the dip brigade entered the market en masse. However, the token failed to sustain its rally, highlighting the presence of bears.
Bearish Market Sentiment Amidst Bullish DOGE Technical Setup
The market sentiment for the DOGE/USD pair is bearish. For instance, the OI-Weighted Funding Rate chart shows significant negative funding rates, reflecting bearish sentiment. Traders are paying to short DOGE, expecting further price declines.
The Futures Open Interest chart displays a consistent decrease in open interest since April, coinciding with DOGE’s price drop from $0.24 to about $0.09. This decrease in open interest, along with falling prices, highlights reduced confidence and market participation.
The persistent negative funding rates indicate traders' expectations of continued downside. The declining open interest signifies a reduction in market activity and investor engagement. Both charts suggest a bearish outlook for DOGE, with market participants anticipating further downward pressure.
On the other hand, DOGE price has formed a bullish technical setup called the ‘falling wedge.’
A falling wedge pattern features a pair of converging trend lines connecting lower highs and lower lows, forming a narrowing shape that slopes downward.
The pattern typically suggests that an asset's price, while consolidating in a downtrend, is losing bearish momentum and preparing for a potential reversal to the upside. Typically, a breakout occurs in the direction of the overall trend, which, for a falling wedge, is upward.
To estimate the price target of a falling wedge pattern, traders measure the widest part of the wedge at the beginning of the formation. They then project this distance upward from the point of the breakout to set a potential target.
According to technical analysis rules, DOGE price could rally over 146% to reach the pattern's theoretical price target near $0.24.
Dogecoin Price Recovers But Struggles Against Bears
The long upper wicks on the recent daily candles further underscored the bearish pressure against the DOGE/USD pair as bears look to defend the $0.103 resistance level.
Hence, bulls would need to flip the immediate resistance to infuse confidence in the rally and target the 0.786 resistance near $0.11.
The relative strength index, scoring a barely neutral 31.21 on the daily charts, leaves enough room for the DOGE price to mount a sustained rally if and when that happens.
Conversely, failing to sustain the uptrend would likely result in the DOGE exchange rate against the USD dropping to its support levels near $0.094 and 0.089 before recovering.
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