(Akash Girimath – FXStreet)
– Dogecoin price is hovering around $0.066, the highest traded volume level for the last 100 days.
– For massive gains to kick start, DOGE needs to sweep the liquidity resting below the equal highs at $0.057.
– A breakdown of the $0.048 to $0.057 demand zone will invalidate the bullish thesis.
Dogecoin price is at that point in its lifespan, where long-term investors need to wait and short-term investors ignore it due to a lack of volatility. This crossroads for DOGE, however, offers a massive payout for patient market participants that are ready to wait for things to fall into place.
Dogecoin price hatches a comprehensive plan
Like many altcoins, Dogecoin price nosedived 71% due to the LUNA-UST fallout between April 25 and June 18. Regardless, the crypto markets formed a collective bottom in mid-June and have been on a recovery path since.
However, checking the volume profile for DOGE for the crash shows that the highest volume was traded at the $0.066 level, aka Point of Control (POC). This barrier serves as a support and resistance level, relative to the price.
Currently, DOGE is trying to bounce off this level, but the market condition seems to be deteriorating due to the recent breakdown of Bitcoin below the 200-week Simple Moving Average (SMA) at $22,749.
From a technical perspective, a breakdown of the POC is in the best interest of Dogecoin price and long-term investors since it would allow DOGE to retrace and collect the sell-side liquidity resting below equal lows formed at $0.057.
Shedding an optimistic light on this narrative is the presence of the $0.057 to $0.048 demand zone. In combination, a pullback into $0.057 will serve as a perfect launching pad for Dogecoin price to kick-start its next leg.
The level that is significant and could hinder this potential rally is the midpoint of the 71% crash at $0.110. Assuming DOGE does retest the aforementioned barrier, it would constitute a 90% upswing.
While the idea of a 90% upswing for DOGE seems appealing, investors also need to consider the invalidation thesis. If the Dogecoin price fails to react to the demand zone due to excessive selling, things could turn ugly swiftly.
A daily candlestick close below the demand zone’s lower limit at the $0.048 level, will not only invalidate the structure but also create a lower low, shifting the narrative favoring bears. This development will also put an end to the bullish thesis and could result in Dogecoin price retracement to $0.045 or $0.040 levels.