Dogecoin (DOGE) is approaching a critical technical setup that could determine its next move. Alphractal's liquidity heat map reveals a large liquidity pool near the $0.50 level, valued at over $380 million.
This level formed during DOGE's previous rally and reflects the concentration of short positions. If selling pressure weakens, analysts believe these short orders could drive a breakout. Historical data shows similar setups have occurred prior to major DOGE rallies.
Before the most recent rally, DOGE consolidated near the lows before a strong increase. The current chart reflects that formation, indicating a potential reversal. A breakout through this liquidity wall could lead to new bullish activity, primarily if momentum rises above $0.50.
The DOGE/BTC Ratio And The Memecoin Area Show Divergence
DOGE/BTC is approaching a key support zone, similar to the pattern seen before the 2021 rally. Alphractal notes that the accumulated liquidation levels still lean heavily towards short positions, increasing the likelihood of a price reversal.
The broader memecoin sector is showing mixed performance. The memecoin index has recovered, now exceeding the market value of 2021, but open interest remains capped at $3.2 billion. Daily trading volume on memecoins is only $12 billion, significantly lower than Bitcoin or Ethereum.
The comparative chart shows BTCUSDT outperforming the memecoin index, with divergence increasingly widening since the beginning of this year.
Despite this poor performance, analysts believe that the memecoin could regain upward momentum if Bitcoin continues to rise. Historically, BTC's bullish cycles often trigger speculative rallies in low-cap assets like DOGE.
The technical structure indicates the potential for an Elliott wave bullish movement.
DOGE is holding its long-standing support zone highlighted in green, serving as a consolidation area since 2021. The current price structure aligns with a potential Elliott wave pattern. According to the analysis, DOGE may be completing Wave 4, with Wave 5 potentially targeting higher levels.
Support indicators include the 50-week and 200-week moving averages, both of which are aligned with the current price. Momentum indicators like MACD suggest that bullish strength may be returning, although confirmation is needed. Since the end of 2022, DOGE has formed higher lows, reflecting gradual accumulation.
A strong recovery from the support zone could confirm this technical setup. Analysts point out that as long as DOGE holds above this area, there remains the possibility to continue rising higher. If confirmed, the next leg could challenge the $0.50 liquidity level and initiate a broader trend reversal.
Dogecoin is at a technical crossroads, with increased short interest and key support levels converging. While the memecoin lags behind significant cryptocurrency assets, DOGE's historical structure and behavior suggest that a breakout could still occur.