- Low trading volume during the recent price bounce was a concern
- Long-term signs and the 1-day structure revealed Dogecoin had more room to rally
The 19% Dogecoin [DOGE] retracement from the previous weekend presented buyers with an interesting opportunity. It also saw a resurgence in retail interest, a conclusion based on the surge in new addresses on-chain during the price dip.
The strongly bullish market sentiment could see a deeper correction though. Zooming out, the MVRV ratio revealed that the memecoin was still undervalued.
Dogecoin retraces for a week, but re-establishes lower timeframe bullish structure
Source: DOGE/USDT on TradingView
The 1-day chart showed a bullish structure, but also a minor retracement for DOGE. The OBV made it clear that although it was on an uptrend, the recent rejection at $0.26 was accompanied by high selling pressure.
This meant that the OBV was once again below its late February lows. A breakout beyond this level earlier in May was seen as a strongly bullish signal, but subsequent profit-taking activity has slightly eroded the shine of this idea.
The RSI remained above 50 to indicate that momentum was bullish. The Fibonacci levels plotted using the lower timeframe rally from $0.164 to $0.26 showed that Dogecoin found support at the 50% retracement at $0.212.
Source: DOGE/USDT on TradingView
On the 4-hour chart, the defense of this retracement level was accompanied by a bullish market structure break. The move beyond the recent lower high at $0.229, marked in green, flipped the structure in favor of the buyers.
However, the OBV was yet to push beyond the highs of 16 May. Hence, the bullish structure shift was accompanied by weak buying volume. This could be followed by another dip to $0.212 or lower.
Finally, the longs vs shorts data from Coinglass revealed that the taker buy/sell volume was nearly equal. Therefore, by volume, the market sentiment appeared balanced and unbiased in the short term.
The data of accounts also showed that long traders composed 75% of the total accounts – An overwhelming majority. This has been the case for the past month.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
