Dogecoin remains under pressure this week as risk-averse sentiment dominates the cryptocurrency and stock markets. Dogecoin dropped to $0.2200 on Tuesday, down 15% from this month's high. However, this decline could be the calm before the storm ahead of a potential recovery.
Whale Accumulation Continues
One of the key indicators in fundamental analysis of cryptocurrencies is whale activity. Whales, or large investors, are often viewed as more sophisticated and experienced players in the market.
Typically, whales will accumulate when they expect the asset's price to recover and sell or short when they predict the asset's price will continue to decline.
Recent data shows that Dogecoin whales are beginning to accumulate. According to Santiment, addresses holding between 1 million and 10 million DOGE currently hold 10.56 billion coins, up from 10.48 billion on May 10.
Similarly, wallets holding between 100 million and 1 billion tokens currently hold 25.86 billion coins, up from 25.53 billion at the beginning of this month.
Dogecoin Price Forms Bullish Flag Pattern
The daily chart shows Dogecoin peaked at $0.2600 last week before trending down to $0.2200.
Now it has formed a bullish flag pattern, a continuation signal. This pattern features a strong upward move followed by a consolidation phase, resembling a flag being raised. Typically, it leads to a strong breakout.
Before this flag appeared, DOGE price also formed an inverse head and shoulders pattern. The head is at $0.1298, the lowest point on April 7, while the shoulders are at $0.1520.
Dogecoin remains above the 50-day and 100-day exponential moving averages. Based on this setup, the coin has the potential to break out and may retest the November 2024 high of $0.4820, a move that would represent a 120% increase from the current level.
DOGE Price Forms Huge Megaphone on Weekly Chart
The weekly chart also supports a bullish outlook, showing DOGE is forming a giant megaphone pattern characterized by two rising trendlines and divergence.
In this case, the lower trendline connects the lowest swing levels since January 2022, while the upper trendline connects the higher swing levels since January 2023.
This structure often precedes increased volatility and broader upside potential. If a breakout occurs, the first key level to watch will be $0.4820. A decisive move above that could pave the way for a run toward the psychological mark of $1.00.