Dogecoin (DOGE/USD) Rallies 15% as Technical Indicators Suggest a Breakout Could Be in the Offing

Dogecoin price has rallied 15% in the past seven days, and technical indicators suggest a breakout could be on the horizon.

However, at the current price level of $0.19, there is a major supply barrier that could hamper further gains.

Trader notes:

According to Glassnode data, around 7% of DOGE's total supply is concentrated at the $0.20 price point, making it a critical resistance zone.

The next major supply zone is at $0.31, with little resistance in between suggesting a potential for a sharp move higher if the $0.20 barrier is breached.

Approximately 15% of DOGE's supply was last moved 6-12 months ago, indicating that many holders who purchased before the rally are still holding their positions.

The 3-6 months HODL wave has been steadily increasing since early March, which suggests that many traders bought during the $0.32-$0.41 rally in January. If the price returns to these levels, some traders may aim to sell at break-even, creating potential resistance.

Dogecoin futures open interest stands at $1 billion, which is significantly lower than the $3 billion average from October 2024. This pattern suggests that the rally is being driven more by spot demand than by leverage.

Furthermore, funding rates have dropped to neutral, confirming that excessive leverage is not a factor in driving the price up.

Crypto trader Cephii predicts that Dogecoin's next phase of price discovery is only a month away, and the gains could occur faster than expected.

"Then one month from now, we'll enter the next phase of price discovery- which could bring HYPER-rapid gains as leveraged traders pile into the final stages of the move- or it could stall out at $0.35 for a few months. Mostly waiting and then gigapump," the trader said.

Dogecoin price today: A technical analysis

Dogecoin is trading at a crucial juncture, having breached the 50-day exponential moving average (EMA) and aiming to clear the 200-day EMA. A successful close above the 200-day EMA could pave the way for a continuation of the recent rally.

Moreover, the relative strength index (RSI) on the 4-hour chart is showing signs of a potential divergence, which could indicate a reversal of the downtrend.

If Dogecoin manages to break above the $0.20 psychological barrier and sustain gains, it could set the stage for a move towards the next resistance level at around $0.31.

On the other hand, if selling pressure emerges and pushes Dogecoin below the 50-day EMA, it could signal a continuation of the downtrend, potentially leading to a retest of the support level at $0.15.

In summary, Dogecoin is approaching a critical juncture that could determine the short-term trend. A breakout above the $0.20 barrier and the 200-day EMA could herald further gains, while a move below the 50-day EMA might signal a continuation of the downtrend.

Dogecoin is currently trading at $0.19, with a 24-hour trading volume of $1,064,589,966.