dogecoin (DOGE) is up nearly 100% quarter-to-date (QTD) on hopes that Elon Musk will integrate the token into the Twitter platform. However, the potential for DOGE to continue its uptrend in the coming weeks is low, according to one popular market analyst.
Short dogecoins hard?
Independent market analyst GCR said it is slightly short on DOGE based on its price’s recent reaction to Musk’s tweet. Notably, DOGE hit a local high of $0.158 on November 1st. On the same day, Musk shared a picture of his pet Shiba Inu on a T-shirt with the Twitter logo.
— Elon Musk (@elonmusk) November 1, 2022
GCR claims that the Musk Effect is wearing off when it comes to the potential integration of Dogecoin into Twitter, meaning most of the gains are already accounted for. So if real integration happens, it will likely be a sell-the-news event. .
the dog stock only holds 2 rounds
bullet 1 – musky tweeting/teasing about integration; already fired
bullet 2 – official twitter integration; he didn’t shoot, but he would sell the news
I’m moderately short on doggo, but leave open space for the short heavier if the 2nd bullet goes off
— GCR (@GCRClassic) November 3, 2022
Overbought correction begins
Meanwhile, Dogecoin continued its corrective move on November 4, three days after it peaked at $0.158.
The price of DOGE fell as low as $0.115 on November 4, partly due to reputation Twitter has suspended its cryptocurrency development project. This brought the token’s net percentage correction from the November 1st local peak to nearly 27%.
In addition, the downward movement appeared because of his extremely overbought conditions with the highest Relative Strength Index (RSI) since April 2021.
The correction forced the price of Dogecoin to retest the December 2021 to May 2022 support (defined by the $0.108-$0.124 range; red bar in the chart above) for a potential pullback. If there is a recovery, the coin may reach $0.185, which is the level coincident with its 0.236 Fib line.
Conversely, a break below the $0.108-$0.124 range could see DOGE drop to $0.055 as their primary downside target, down 55% from current price levels.
DOGE chain data
In addition, Dogecoin chain data reveals a consistent decline in key metrics entering November, which could increase selling pressure.
For example, DOGE’s Twitter-led price surge coincided with a spike in whale transactions (worth more than $100,000), suggesting they fueled the move to the upside. However, after November 1st, fewer whales interacted with the Dogecoin network.
Meanwhile, the distribution of Dogecoin supplies to addresses with 1,000 to 10 million DOGE tokens has fallen along with the price. Conversely, the supply controlled by addresses containing more than 10 million DOGE tokens increased slightly.
In addition, addresses below 100 DOGE increased, suggesting that retail investors have somewhat offset the whales’ selling pressure.
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