Dogecoin, which plummeted for 5 consecutive days, will it start a rally again after overcoming the '0.1 dollar' Maginot Line?

▲ Dogecoin(DOGE) ©

A prominent meme coin, which had seen investor sentiment freeze due to a continuous decline for five consecutive days, is now showing signs of a rebound, having successfully defended a key psychological price level and buoyed by the return of individual investors.

According to investment media FXStreet on May 20 (local time), Dogecoin (DOGE) successfully rebounded during Wednesday's trading session, holding above the crucial psychological support level of $0.1000. During the past six days of decline, risk aversion sentiment spread, causing DOGE's futures open interest to fall to $1.36 billion as of Tuesday. However, the mood reversed on Wednesday. Over the recent 24 hours, open interest increased by approximately 4% again, reaching $1.47 billion, indicating renewed active position building by individual investors.

Signs of investor return are also confirmed in the funding rates of the futures market. The sharp increase in funding rates to 0.0062% alongside the rise in open interest signifies a strong willingness among buyers to take long positions (betting on price increases), even if it means accepting a certain level of premium. This is interpreted as a signal that market expectations for short-term price increases are resurfacing, stimulating an influx of buying power.

However, technical indicators showing long-term trends still call for a cautious approach. Currently, DOGE's price is below its 50-day Exponential Moving Average (EMA) of $0.1038 and significantly below its 200-day EMA of $0.1256, indicating a limited overall long-term recovery trend. On the daily chart, the Relative Strength Index (RSI) has fallen to 45, below the baseline, as selling pressure solidifies its dominance, and the Moving Average Convergence Divergence (MACD) and signal line have been trending downwards towards the zero line, generating consecutive negative histogram bars since a death cross occurred last Saturday.

Market experts are pointing to the breakthrough of the 50-day EMA as a watershed moment for determining short-term direction. If DOGE successfully settles above the 50-day EMA of $0.1038 on a daily closing basis, there is a high probability of a full-fledged rebound rally to $0.1161, a strong resistance level that thwarted two previous attempts to rise earlier this month.

Conversely, despite the current intraday upward trend, the possibility of the support level breaking due to overwhelming selling pressure cannot be ruled out. If the daily close occurs below the $0.1000 support level, which is the last bastion in the technical structure, downside risks would significantly increase, with a warning that an additional flash crash to the previous low of $0.0879, recorded on February 11, could occur.

*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.*