DOGE: Is a breakout on the way?

  • Dogecoin might exit its low volatility while pushing the price to $0.090.
  • Large-scale liquidations might occur around $0.083.

AMBCrypto’s analysis of Dogecoin’s [DOGE] 4-hour chart showed that volatility around the coin has become extremely tight.

According to the chart, the lower and upper layers of the Bollinger Bands (BB) closed in on one another. We observed that the last time this occurred was in October 2023.

At that time, AMBCrypto reported how DOGE could make a late showing and repeat its usual October upswing. Days after the article, the price of Dogecoin climbed from $0.060 to $0.075.

With a similar situation as of this writing, there is a chance that the coin might repeat the same movement. But do other indicators agree with this forecast?

Before you panic buy, look out!

Well, signals from the Supertrend showed that it might not yet be time to buy DOGE. The Supertrend suggests a buy signal when the indicator closes below the price and the color is green.

On the other hand, a sell signal is generated when the Supertrend closes above the price and the color is red.

In Dogecoin’s case, the latter was the case. With this trend, DOGE’s price could be headed downwards before any breakout occurs. Therefore, DOGE might decrease, but it was unlikely that it would go below $0.075.

Source: TradingView

However, the Relative Strength Index (RSI) was 50.85, suggesting that buying momentum was returning to the market.

Let’s say the RSI reading was below 50.00, it could have implied very low demand for the coin. Should demand for Dogecoin improve, then the price might add an extra 12% increase that takes it to $0.090.

The $0.08 region is an important one

AMBCrypto then proceeded to check the Liquidation Heatmap. The Liquidation Heatmap predicts price levels where large-scale liquidation might occur.

For context, liquidation occurs when a trader’s position is forcefully closed due to price fluctuations and the margin balance is not adequate to keep the position open.

According to data from HyblockCapital, large liquidations might occur around $0.083. As such, longs who have open positions with high leverage could experience a significant loss.

Dogecoin Liquidation Heatmap

Source: HyblockCapital

In terms of the Open Interest (OI), Coinglass showed that it was $422.09 million. This value was a slight increase from what it was 24 hours earlier.

The OI refers to the sum of all open positions in a contract. This indicator increases/decreases based on net positioning.

If the OI decreases, it means net positioning has increased and liquidity into contracts slid. However, an increasing OI suggests a surge in net positioning and more capital inflow into contracts.

Dogecoin Open Interest

Source: Coinglass

Realistic or not, here’s DOGE’s market cap in BTC’s terms

When looking at Dogecoin’s price action alongside the OI, one can deduce that an impulsive movement could be next. For DOGE, a breakout of the $0.080 resistance looked likely.

Should this be the case, DOGE’s next target might be to reach $0.095. Also, a highly bullish rise to $0.01 should not be invalidated.

Next: Assessing the effects on ETH as whales start to show interest

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