Let’s analyze whether the emerging sell signal this year could provoke a sharp drop in the price of Dogecoin (DOGE) by 26 percent.
Over the past seven days, the price of Dogecoin has risen 42 percent. However, as always, with price increases comes potential for correction, and the latest DOGE sell signal was the strongest so far this year.
Although Dogecoin holders are still hoping for growth.
Along with the strengthening of memcoin on the charts, DOGE managed to reduce the losses incurred in mid-March. The 42 percent gain offset the 26 percent decline, bringing DOGE closer to $0.20.
DOGE holders remain extremely bullish on the coin, as evidenced by the increase in open interest. This figure for the total number of outstanding contracts on various derivatives such as options and futures rose 66 percent to $600 million. The predominance of long positions indicates a possible price increase.
Technical indicators also point to a bullish trend. The Relative Strength Index (RSI), which measures the speed and change in price movements, is in the neutral bullish zone, while the Moving Average Divergence (MACD) indicator is also showing a bullish signal.
These factors foreshadow further growth in the price of Dogecoin.
However, there is a sell signal that could cause the price to fall.
If DOGE can break through the resistance at $0.182 and establish it as support, it could lead to a rise to $0.20, which would be a two-year high.
But price divergence across daily average addresses (DAA) gives a sell signal. This metric compares changes in the price of an asset to the number of new addresses interacting with it, and can indicate a discrepancy between price and network activity.
Historically, when DAA has signaled a sell, Dogecoin's price has experienced a correction. Considering that this is the first and significant signal of the current year, DOGE may decline to $0.164. A fall to $0.151 could cancel the bullish scenario and lead to a 26% drop in price to $0.135.
