Dogecoin's price recently surpassed a key resistance level, but signs indicate a possible correction before a new rally.
Dogecoin Investment Flows
Over the past week, Dogecoin has shown consistent negative net flows on exchanges. This means more Dogecoin is being withdrawn than is being deposited. This accumulation trend suggests that investors are planning to hold their assets in anticipation of price increases, thereby reducing selling pressure and setting the stage for price growth.
Signals from the Derivatives Market
On July 21, the DOGE OI-weighted funding rate hit 0.0239%, typically signaling excessive bullish positions. High funding rates can create a risky situation known as a 'long squeeze,' where a sudden price drop forces over-leveraged traders to sell, potentially leading to further price declines. This calls for caution in the short term.
Technical Indicators and Projections
Technical indicators support a bullish outlook. On the daily chart, the 20-day EMA has crossed above the 200-day EMA, a classic bullish signal. The next target is around $0.48, indicating a potential 74.5% gain from current levels near $0.275.
Overall, the current state of Dogecoin indicates the possibility of a short-term correction; however, the broader market remains bullish. Should Dogecoin break the $0.30 mark, the subsequent movement may be far from over.
