Activity in the futures market has also been rising, but this is still a mild recovery as open interest (OI) currently sits at $1.7 billion, down 72% from a recent peak of $6 billion. This implies that traders’ participation in the rally is still relatively low.
There needs to be higher interest in the speculative front to further fuel a strong rally. This would be the second driver that needs to be in place to catapult Dogecoin to higher levels.
If the latest wave of buying continues, we may see DOGE rising to $0.115 in the near term, meaning a small upside potential of 8.5%. However, if we break past that resistance, the short squeeze should intensify.
We already saw how short positions have built up strongly above key thresholds. If we get another strong rally and break that ceiling, the odds of a massive squeeze will rise dramatically.
Rising past the 200-week exponential moving average (EMA) at $0.15 will further add fuel to that rally, if it happens, and should set the stage for the continuation of the move toward the $0.28 resistance.
Weekly RSI Says “Buy” and Anticipates a 170% Gain for DOGE
The Relative Strength Index (RSI) recently dipped below 35 in this higher time frame. This is consistent with what we see in other major cryptocurrencies. In DOGE’s case, this signal has worked three out of the last four times to predict major bullish moves.
What we like the most about the latest price action is that the weekly RSI just rose above the 14-week moving average. This did not happen the last time we got the signal, and was probably the biggest evidence that it was a false positive.
Paired with the fact that DOGE just bounced off a key multi-year support area at $0.09, we get ourselves quite an attractive setup that could lead to interesting gains if historical patterns repeat.
Based on what we have seen in previous cycles, DOGE could rise by 170% over the next 6 to 12 months. Breaking the $0.115 resistance would further confirm this buy signal in the weekly RSI.
Dogecoin Offers 4x Trading Opportunity After Key Resistance Breakout
Heading to the 4-hour chart, we can see an interesting breakout above what had been a strong sell wall at around $0.103. The selling pressure ramped up as soon as DOGE hit $0.11. This is a normal pullback and could be creating an opportunity for a short-term trade with a risk-reward ratio of 4x.
