Does Dogecoin present a buying opportunity on its latest dip?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

Dogecoin traded within a month-long range. A deviation beneath the range low followed by a reversal would be a buying opportunity.

Bitcoin visited the $21.4k area in recent hours but bounced to $21.6k once more. This level is a critical support level for Bitcoin.

The $21.2k-$21.6k area has acted as resistance in August and early November. If January’s rally is to continue, ideally BTC would see a recovery from this zone.

In light of this information, the fact that Dogecoin also sat atop month-long support suggested that buyers are likely to have their eyes on DOGE in the next couple of days.

If Dogecoin recovers, it can make gains of 15% northward before meeting significant resistance. On the other hand, heightened selling pressure could see sharp losses for the meme coin.

Dogecoin rally retraces after running into a 12-hour bearish order block

Source: DOGE/USDT on TradingView

The red box highlighted a 12-hour bearish order block just below the $0.1 level. Dogecoin rallied from $0.067 to $0.099 in early February. This represented gains of 48% in five weeks. However, the $0.1 is a psychological and technical area of resistance.

Sellers proved their strength once more as DOGE retested the $0.09-$0.1 zone. At that time, a bearish divergence was seen as well. In yellow, a range from $0.079-$0.092 was highlighted. It can be seen that the mid-point of this range, at $0.086, has acted as support and resistance over the past month.

This highlighted the credibility of the range, despite the deviation toward $0.1 earlier this month. At the time of writing, the price was back at the range lows. The RSI has made a series of higher lows over the past couple of days, while DOGE remained flat at $0.082.

The CMF was in neutral territory, but it has already been highlighted that both BTC and DOGE traded just above significant support levels.

From a risk-to-reward perspective, buying DOGE in the $0.078-$0.082 area can be profitable over the next week or two. Bulls can look to book profits at the mid-range mark and the range high at $0.086 and $0.092 levels respectively.

MVRV and weighted sentiment highlight the selling pressure of the past two weeks

Source: Santiment

The 30-day MVRV ratio dipped below zero as selling pressure intensified over the past few days. A spike in the 90-day dormant circulation of DOGE was also seen. This suggested a moderate amount of DOGE was moved, which reinforced the idea of selling pressure.

Another interpretation of this data is that short-term holders have finished taking a profit, and the price was ripe for another move upward. Combined with the technical findings, this seemed the more likely conclusion.

Yet, a drop beneath $0.078 would be a stern warning sign to buyers that bears have seized control once again.

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