Traders may find an opportunity in Dogecoin’s range formation
Dogecoin (DOGE) has formed a sideways structure on the four-hour chart and sellers are currently in control, according to the rising Cumulative Volume Delta (CVD) spot. The cryptocurrency has been trading between the key levels of 23.6% ($0.05779) and 50% ($0.06316) Fib levels since last weekend. With Bitcoin (BTC) below $25k, DOGE could provide a shorting opportunity if the sideways structure continues.
Based on the Fibonacci retracement tool, DOGE has been consolidating between the 23.6% and 50% Fib levels. At the time of writing, the price was nearing the range high and the 50% Fib level of $0.06316. The overall market structure on the four-hour chart is bearish, suggesting a potential price rejection that could lead DOGE to retest the range low at $0.05779. This would create a shorting opportunity with an entry at the 50% Fib level and a target at the 23.6% Fib level.
A candlestick close above the 61.8% Fib level ($0.06556) would invalidate the bearish thesis, while a close above the lower high at $0.7333 could flip the market structure to a bullish bias. The Relative Strength Index (RSI) and the Chaikin Money Flow (CMF) have both shown some inclination, with the CMF crossing its median zero level to indicate improved capital inflows. However, the RSI has fluctuated below the 50-mark, indicating overwhelming selling pressure.
The declining Cumulative Volume Delta (CVD) confirms the selling pressure seen from the RSI, indicating increased selling volumes in recent days. On the other hand, the open interest (OI) on the futures market has slightly improved, but the strong decline in CVD suggests that sellers are firmly in control.
In summary, DOGE has formed a sideways structure and sellers are currently in control. If the structure continues, it could provide a shorting opportunity with an entry at the 50% Fib level and a target at the 23.6% Fib level. However, a bullish scenario would require a close above the 61.8% Fib level or the lower high. The RSI and CMF indicators are showing mixed signals, with the RSI indicating selling pressure and the CMF indicating improved capital inflows. The declining CVD confirms the selling pressure, while the slight improvement in OI provides some hope for bulls.
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