Dogecoin (DOGE) was trading with a bullish bias around $0.0736 as buyers focused on undoing losses incurred in the last couple of days. Technical analysis revealed that the recent sell-off might have offered traders a chance to buy the altcoin at a discount as it appeared primed for an upswing.
Dogecoin Bulls Eye 10% Returns To $0.0809
DOGE price action had formed a bullish cup-and-handle chart pattern on the four-hour chart, setting itself up for a bull run. At press time, Dogecoin was trading in the green above the $0.0724 support level, embraced by the 50-period Simple Moving Average (SMA).
The first hurdle in DOGE’s way was the 100 SMA which sat at $0.0744. Additional barriers would emerge from the $0.0776 resistance level and the 200 SMA which was sitting at $0.0787. Market participants could expect the price to consolidate within this supply zone for a few days.
The Relative Strength Index (RSI) was moving upwards, suggesting that the bulls had begun taking control of DOGE. Note that Dogecoin’s upward movement would display increased strength once the RSI closes the gap to 70, to enter the overbought region.
The bullish price structure forecasted a 9.98% upward move from the current levels to retest the $0.0809 supply zone.
DOGE/USD Four-hour Chart
Perhaps the most important on-chain metric that aptly reveals the bullish outlook for Dogecoin’s price was increasing daily transactions on the network. This on-chain metric is used to determine the engagement of users with the blockchain which in turn determines the demand for the crypto. Based on data from Dune, daily transactions on the Dogecoin network have been increasing over the last week spiking to 1.12 million on May 17.
To put this into context, the average daily transactions on Dogecoin sit at 20,000, making the May 17 figure a 5,500% increase in the span of seven days.
Dogecoin Daily Transactions
As can be seen in the chart above, Dogecoin’s daily transactions surpassed those on the Bitcoin network, which stood at around 579,000 on May 17.
This is attributed to the current hype around the recent launch of “Doginals” – basically Dogecoin’s take on NFTs – that utilize the DRC-20 token standard. If the DOGE Army keeps up the hype, the leading meme coin might be able to bring back the investors’ interest.
The Flipside
The most probable invalidation of the bullish scenario is if the price produces a four-hour candlestick close below the handle’s low at $0.0724, where the 50 SMA sits, to revisit the swing low at $0.0716.
If the price breaks below this area, then the whole optimistic thesis would be void, and the DOGE price would likely fall to seek solace from the cup’s bottom at $0.0698, resulting in a 5.18% decrease from the current price.
