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Dogecoin: With buyers exhausted, DOGE may head in this direction…

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Dogecoin [DOGE] was exchanging hands at $0.1418 per token at the time of writing. The price of leading meme coin rallied by over 130% in the last week, data from CoinMarketCap revealed.Ā 

Courtesy of Elon Muskā€™s final acquisition of social media giant Twitter, data from IntoTheBlock revealed that up to 62% of DOGE investors had turned a profit in the recent price boom. Faring better than holders of leading coins Bitcoin [BTC] and Ethereum [ETH], respective holdings in profit for these assets were 54% and 57%.Ā 

DOGE bulls calling it quits?

Following several days of token accumulation and a corresponding surge in price, DOGE buyers no longer appear to be able to support any significant price rally. According to data from CoinMarketCap, DOGEā€™s price was up by 16% in the past 24 hours. Its trading volume, however, declined by 10% within the same period. This was a classic indication that a price reversal was imminent as buyers in the DOGE market witnessed exhaustion.Ā Ā 

Furthermore, data from on-chain analytics platform Santiment revealed a surge in the assetā€™s social dominance. As of this writing, DOGEā€™s social dominance was 28.38%, the highest in the past six months.Ā 

Source: Santiment

While a rally in an assetā€™s social activity acts as a precursor to a price rally, a continued spike in social dominance during the price rally usually hints at a price reversal. According to Santiment, ā€œDOGE social dominance spikes are foreshadowing price reversalsā€ as DOGE-related discussions peaked right after the local top on 29 October.Ā 

With the market marked by buyersā€™ exhaustion, a sustained rally in the assetā€™s social dominance would be mere ā€œnoise.ā€

Source: Santiment

All that is good must end

An assessment of DOGEā€™s performance on the daily chart showed key indicators pointed towards a coming price reversal. As of this writing, the assetā€™s Relative Strength Index (RSI) was significantly overbought at 91.39. Also, in an uptrend, DOGEā€™s Money Flow Index (MFI) was spotted at a high of 82.28.

The positions occupied by these key metrics showed that DOGE was significantly overbought at press time. Typically, such highs are usually followed by a price reversal as buyers, more often than not, cannot sustain an assetā€™s price at that level.

Per DOGEā€™s Directional Movement Index (DMI), the buyers had control of the market at press time. Their strength (green) at 50.86 rested solidly above the sellersā€™ (red) at 2.12. Furthermore, the meme coin registered a price rally with no corresponding uptick in trading volume in the last 24 hours. Thus, control was bound to change hands in the coming days.Ā 

Source: TradingView

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Abiodun is a freelancer writer working with AMBCrypto. He is also a lawyer with over 2 years of experience. With a keen interest in blockchain technology and its limitless possibilities, Abiodun spends his time understanding the technology, building projects, and educating people about it.
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