TLDR:
- Dogecoin reclaimed the $0.17 mark after a 6% rally due to US-China trade optimism
- DOGE is forming a falling wedge pattern with technical indicators suggesting a potential breakout to $0.20
- DogeOS recently secured $6.9 million in funding from Polychain, boosting sentiment
- Short liquidation risks of $10.96 million at $0.1755 and $13.65 million at $0.1761 could fuel a price surge
- Analyst Ali Martinez suggests a potential rebound to $0.183 if the $0.1667 support level holds
Dogecoin (DOGE) has experienced mixed price action recently, with technical patterns and market factors pointing to a potential breakout despite some bearish sentiment. The popular meme cryptocurrency is currently testing crucial support levels while showing signs of a possible recovery.
DOGE recently bounced 4% to reclaim the $0.17 mark as optimism around US-China trade talks fueled a broader memecoin rally. This recovery comes after the cryptocurrency had been trapped in a falling wedge pattern on the 4-hour chart over the past two weeks.
The pattern formed with swing lows from April 2022 constructing the lower boundary line, while bullish peaks on April 26 and May 2 generated the resistance trend line. This technical formation often precedes bullish breakouts.
Currently, Dogecoin is showing a struggle to overcome the 200 EMA line near the 61.80% Fibonacci level at $0.1729. Despite this resistance, the recent positive cycle within the wedge pattern hints at a potential retest of the overhead ceiling.
Technical indicators offer mixed signals. The MACD and signal lines have given a positive crossover, suggesting a trend reversal, while the sudden recovery has limited the chances of a death cross event between the 50 and 200 EMA lines.
Market Factors Influencing DOGE
Several external factors are currently influencing Dogecoin’s price movement. China has announced it is open to negotiating a trade deal with the U.S. in Switzerland this weekend, which has boosted sentiment in U.S. markets and crypto.
The derivatives market is showing growing bullish interest in the meme coin. DOGE open interest has increased by 1.45% to reach $1.69 billion, reflecting increased trader interest. The open interest has risen to 0.0071%, signaling growing bullish sentiment.
As bulls gradually gain dominance in the derivatives field, the short liquidation risk grows for Dogecoin. According to exchange liquidation maps, DOGE could witness a massive short liquidation of $10.96 million if it reaches $0.1755, potentially fueling a price surge and increasing the risk of a $13.65 million liquidation at $0.1761.
Recent funding developments have also contributed to positive sentiment. DogeOS has secured funding of $6.9 million from Polychain, historically causing short-term price spikes aligned with sentiment surges around the meme coin.
Current Sentiment and Network Activity
Despite these positive signals, Dogecoin has faced some bearish pressure in recent days. DOGE has declined by 6.78% over the past seven days, trading at around $0.1667 at press time, marking a 3.33% daily decline.
Dogecoin’s Weighted Sentiment has remained in negative territory over the past three days, indicating strong bearishness among market participants. This negative perception has led many traders to step back, resulting in decreased network activity.
The price DAA (Daily Active Addresses) divergence has remained negative over the past seven days, implying that network activity is relatively low compared to current prices. This suggests that Dogecoin’s prices are not backed by actual demand.
With many market players bearish, they have been aggressively shorting the memecoin. The DyDx Exchange Funding Rate has held in negative territory over the past week, indicating that investors expect prices to drop further.
The declining RVGI (Relative Vigor Index), which has dropped to -0.12, reflects strong downward momentum with the memecoin closing with lower lows. If this downtrend continues amid strong bearish sentiment, DOGE could drop further, potentially finding support around $0.161.
For a recovery to occur, buyers need to overcome sellers who are currently dominating the market. External factors such as positive macroeconomic reports or favorable rate decisions could help bring buyers back to the market, potentially propelling DOGE towards $0.178 or higher.
Crypto analyst Ali Martinez has suggested that if the key support level around $0.167 holds, it could spark a strong rebound towards $0.175 and even rally to $0.183. However, DOGE has struggled to successfully hold above this level for the past three days.
#Dogecoin $DOGE is testing key support around $0.167. Holding this level could spark a rebound toward $0.175 and potentially $0.183. pic.twitter.com/oQoFjrc6V4
— Ali (@ali_charts) May 6, 2025
The next few days will be crucial for Dogecoin as it tests key support levels that could determine its short-term price direction.
