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▲ Dogecoin (DOGE)/ChatGPT generated image ©
Dogecoin (DOGE), the leading meme coin, is continuing its short-term surge and attempting to break through a key resistance level. However, a combination of weakening investor sentiment in the derivatives market and overbought signals is increasing caution about a trend reversal.
According to investment media FXStreet on May 5 (local time), Dogecoin surpassed $0.1100 on Tuesday, extending its approximately 10% gain since last week. Despite overall market sentiment improvement, the derivatives market is losing individual investor confidence, and technical indicators also point to an overbought state, suggesting a risk of downward reversal. Thus, a cautious bullish outlook prevails.
The decrease in demand in the derivatives market clearly shows a decline in investors' risk appetite. According to CoinGlass data, Dogecoin futures' Open Interest (OI) decreased by more than 4% over the past 24 hours, reaching $1.69 billion. This means that the nominal value of outstanding contracts remaining in the market has decreased.
Furthermore, the Open Interest weighted funding rate also plummeted from Monday's high of 0.0043% to 0.0019%. This drop in indicators confirms a significant decrease in interest from bullish investors looking to maintain long positions.
From a technical perspective, Dogecoin is currently trading around $0.1115, maintaining a short-term upward bias. While crossing the 50-day exponential moving average (EMA) of $0.0993 indicates improved underlying demand, caution is needed as the Relative Strength Index (RSI) is at 76, indicating an overbought condition. The upward momentum shown by the Moving Average Convergence Divergence (MACD) is likely to face a consolidation or correction phase before testing further resistance levels.
On the upside, the supply zone at $0.1160, tested on February 15, acts as the next major resistance level and a key indicator for breaking out of the long-term downtrend. If this zone is breached, it could target the 200-day exponential moving average (EMA) at $0.1254. Conversely, on the downside, the psychological support level of $0.1000 serves as the primary defense line, and in the event of a deeper correction, the 50-day EMA at $0.0993, where buying pressure is expected to regroup, stands as a strong technical support level.
*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.*
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