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The cryptocurrency market experienced the highest leverage since April 2021 yesterday, December 9, as reported today. Amid the market shakeup, Dogecoin (DOGE) is one of the altcoins showing significant signs of strength. in a mail On
Here’s why Dogecoin seems “amazing”
Despite the market decline, Dogecoin managed to hold the most crucial support level. CRG shared the following frame and commented: “DOGE looks amazing. The entire market took a shit but it barely flinched and didn’t break the structure. Now funding has been fully restored and a ton of OI has been removed. In my opinion, it won’t be long until this becomes a strong trend again.”
The chart reveals several critical insights that support your bullish outlook for DOGE. Firstly, Dogecoin held a crucial bullish trend line on the 4-hour chart (DOGE/USDT). This trend line has acted as a dynamic support level that Dogecoin price has touched but not fallen below on three separate occasions since mid-November.
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Each touch of this trend line caused Dogecoin price to bounce, suggesting strong buyer interest at these levels. This alignment with the uptrend line is crucial because it indicates not only support but also growing confidence among investors whenever the price drops to this line and subsequently recovers.
Resistance, on the other hand, formed near the $0.47 mark. This level has been tested several times and each attempt to surpass it has met with resistance. Repeated tests of this resistance level without a breakout could typically suggest a consolidation phase, potentially setting up a stronger bullish move if market sentiment changes positively.
Furthermore, the chart shows a notable reduction in open interest in stablecoin margined contracts. According to Coinglass dataOn December 9, $86.29 million in DOGE long positions were liquidated, the highest figure since the 2021 bull run.
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This reduction in open interest presents a significant “washing” of speculative positions, typically seen as a market reset where weaker hands come out and excess leverage is reduced. Notably, this clearing of market participants could be another indication that a more sustainable bullish move is underway.
Another vital aspect shown in the chart is the resetting of funding rates to lower levels, which is significant as it reduces the cost of holding long positions. Lower funding rates may encourage new buying activity, especially by participants who were previously sidelined due to the high costs associated with maintaining leveraged positions.
CRG’s analysis also includes an observation on Cumulative Volume Delta (CVD) for both futures and spot markets. The futures CVD has moved below that of the spot market, indicating that futures traders could be taking more bearish positions or closing existing positions more aggressively compared to spot traders. This divergence suggests that the spot market, which is generally less speculative, is maintaining its bullish trend, while acting as a buffer against bearish futures markets.
At press time, DOGE was trading at $0.40.
Featured image created with DALL.E, chart from TradingView.com
