Dogecoin, Is a Short Squeeze Starting? Buying Pressure Returns

▲ Dogecoin (DOGE)/ChatGPT generated image ©

Dogecoin is showing signs of a rebound with indications of a short squeeze (buying pressure occurring to liquidate or cover short positions). Even during the recent correction phase, it has held key moving averages, leading the market to once again focus on the possibility of further upside.

According to investment media FXStreet on May 13 (local time), Dogecoin (DOGE) rebounded after two consecutive days of decline during the week, maintaining above its 100-day exponential moving average (EMA) of $0.1064. The media analyzed the surge in short position liquidations across the broader cryptocurrency market over the past four hours as an early sign of an upward trend reversal. According to CoinGlass data, total liquidations over the past 24 hours amounted to $240 million, with long position liquidations accounting for $180 million. However, over the recent four-hour period, $17 million of the $21 million in liquidations occurred in short positions, indicating a short-term rebound.

The media also assessed that Bitcoin (BTC) maintaining above $80,000 is supporting market recovery sentiment. In particular, Dogecoin futures open interest slightly recovered to $1.64 billion, and the funding rate also remained positive at 0.0057%, indicating a continued dominance of buy positions. This was interpreted to mean that investors are increasing their long positions in anticipation of further price increases.

Technically, the short-term sentiment is also not bad. Dogecoin is currently trading above its 50-day EMA of $0.1024 and its 100-day EMA of $0.1064, with short-term moving averages showing a gradual upward trend. The market also discusses the possibility of a future golden cross. However, the price still remains below the 200-day EMA of $0.1248, leading to analysis that it is too early to call it a full-fledged uptrend reversal.

The Relative Strength Index (RSI) moved around 62, suggesting that upward pressure remains. Conversely, the Moving Average Convergence Divergence (MACD) slightly dropped below the baseline, also showing a slowdown in recent upward momentum. The media suggested the upper resistance levels as the $0.1161 supply zone and the 200-day EMA of $0.1248. It explained that if this zone is broken on a daily closing basis, further upside potential up to $0.1500 could open up.

Conversely, if the support levels of the 100-day EMA at $0.1064 and the 50-day EMA at $0.1024 break down, the short-term bullish scenario could weaken. FXStreet assessed that Dogecoin is currently in a phase of testing its rebound potential after a period of consolidation following a correction, and short-term, the short liquidation trend in the derivatives market and Bitcoin's direction will be key variables.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*