- Dogecoin price is trading at a confluence consisting of the $0.0491 to $0.0578 demand zone and equal lows.
- Due to the nature of the existing support, buying pressure is in excess and could kick-start an explosive move to $0.089.
- A daily candlestick close below $0.0491 without a quick recovery will invalidate the bullish thesis.
Dogecoin price has collected liquidity resting below the equal lows, which pushed it into a demand zone. This development produces a double spike in buying pressure that could kick-start a run-up for DOGE.
While technically, this outlook makes sense, investors need to keep a close eye on Bitcoin price, which could ruin the setup for the meme coin.
Dogecoin price awaits buy signal
Dogecoin price has been producing lower highs since May 2021 and has created a declining trend line that has kept the weekly DOGE candlesticks from closing above it. This massive sell-off could be coming to an end, which could result in an explosive breakout.
The most recent sell-off between August 17 and September 7 knocked Dogecoin price from $0.0890 to $0.0582. This 35% crash resulted from rejection at the multi-year declining trend line.
Regardless, the top of the aforementioned run-up formed equal highs at roughly $0.0890, which will be the target of the next run-up. The aforementioned crash caused DOGE to sweep below the equal lows at $0.0574 and tagged the $0.0491 to $0.0578 demand zone.
As a result, the reversal in the Dogecoin price will have an extra oomph to push it higher. The only green signal that DOGE needs is from Bitcoin price. The big crypto seems to be in a pickle, and the directional bias will be established after the Federal Open Market Committee (FOMC) meeting later today.
Although DOGE was supposed to collect the sell-stop liquidity below these swing lows, it did not. Instead, the Dogecoin price formed a base here after a brief consolidation and triggered a 7% run-up so far.
Regardless, investors can expect a 50% run-up in Dogecoin price from the current position at $0.0580.
DOGE/USDT 1-day chart
An interesting metric to back the technical standpoint’s bullish outlook is the accumulation of whales holding between 10,000 to 10,000,000 DOGE tokens. These investors started accumulating the meme coin in mid-August and are continuing to do so.
The most impressive group is the ones that hold between 1 million to 10 million DOGE tokens; these holders have increased from 3639 to 3677, denoting an addition of 38 new whales to the category.
DOGE supply distribution
While technicals and on-chain metrics lean toward a bullish outlook, all eyes are on Bitcoin price. If Dogecoin price produces a daily candlestick close below the $0.0491 to $0.0578 demand zone will create a lower low and invalidate the bullish thesis.
In such a case, DOGE could slide lower and tag the $0.0470 support floor, where sidelined buyers can step in and trigger another recovery rally.