Home Correction trading $ DOGE must undergo a correction as trading volumes have fallen by 63% in the last five days

$ DOGE must undergo a correction as trading volumes have fallen by 63% in the last five days

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Summary:

  • The price of the popular memecoin DOGE has risen more than 100% in the past week, thanks to the acquisition of Twitter by Elon Musk.
  • On-chain data assessment revealed that the current market is marked by buyer exhaustion.
  • Key indicators on the daily chart suggest a price reversal is imminent.

Courtesy of Elon Musk’s eventual acquisition of social media giant Twitter, the price of popular memecoin Dogecoin [DOGE] rose more than 100% in the past week, data from CoinMarketCap revealed.

With the last few days marked by a large accumulation of DOGE that prevents any further price growth.

Say your last goodbyes

While DOGE’s price has surged in recent days, its trading volume has steadily declined. According to data from on-chain analytics platform Saniment, DOGE’s trading volume at press time was $7 billion and had fallen 63% in the past five days. This divergence between the price of an asset and its trading volume usually indicates an exhaustion of buyers which is usually followed by a price reversal.

Source: Santiment

In addition to a price/volume divergence, an assessment of DOGE’s performance on the daily chart indicated an impending price reversal.

At press time, DOGE’s Relative Strength Index (RSI) was pegged at 79. This showed that the meme token was significantly overbought. DOGE’s Money Flow Index (MFI), which peaked at 76, is also indicative of this fact.

The positions occupied by these key indicators showed that a significant accumulation of DOGE has taken place over the past few weeks. This caused it to be overbought. With its RSI and MFI at such highs, a downward price correction ensues, as buyers generally cannot sustain the price of an asset at this level.

Additionally, the dynamic line (green) of DOGE’s Chaikin Money Flow was spotted in a downtrend at 0.02. This meant that the buying pressure had started to wane. If it fell below the middle line to show a negative value, it would mean that the sellers have taken control of the DOGE market.

$ DOGE must undergo a correction as trading volumes have fallen by 63% in the last five days 16
DOGE/USDT chart by trading view

The positive bias continues to follow the token even

Assessed on a 7-day moving average, DOGE’s MVRV was 16.37% at press time. This meant that if all DOGE holders sold their coins at its current price, they would generate double profit on their DOGE investments.

On top of that, investors retained their positive sentiment, with DOGE’s weighted sentiment showing a positive result of 7.117%.

$ DOGE must undergo a correction as trading volumes have fallen by 63% in the last five days 17
Source: Santiment

With key on-chain metrics and movement on the price charts hinting at an impending price reversal, caution is advised before DOGE trading positions are taken.