Dogecoin price has broken out of a descending channel and retested it as support, confirming bullish technical structure. Technical Analysis in Brief

Dogecoin [DOGE] has broken out of a descending channel and retested it as support, confirming bullish structure.

Price action has held steadily above the $0.22 level.

On-chain data reveals heavy short liquidations and an undervalued MVRV Z-score.

However, network activity shows a short-lived surge followed by a sharp retracement.

Dogecoin price has encountered resistance at the $0.25 zone, which could limit immediate gains.

Dogecoin price showed strength as it rebounded from the crucial support at the $022 level. Despite encountering resistance at the $0.25 zone, on-chain metrics suggest that the meme coin is in a healthy condition for sustained upward action.

Further, recent price action saw short liquidations outweigh long liquidations sharply, indicating a possible market-wide short squeeze.

On-chain data: Is there room for more growth?

On-chain data from CoinGlass showed that for the past 24 hours at press time, short liquidations totaled $387K while long liquidations came in at only $65K. This liquidation imbalance usually accelerates price movement and puts pressure on the coin to move further in the direction of the liquidated positions.

Moreover, MVRV Z-score sat at 0.94 at press time. Generally, a Z-score above 2.5 suggests overvaluation while a low score indicates that most holders are holding at a loss or in minimal profit.

Therefore, the current low reading on MVRV Z-score signaled that there was little urgency for traders to sell at a loss, which in turn, could sustain the current rally.

On the other hand, DOGE’s Stock-to-Flow Ratio surged to 99.53, which is an all-time high. Usually, a rising Stock-to-Flow Ratio signals decreasing supply growth, which in turn, increases scarcity and price. However, such a sharp rise could also signal unusual market activity or upcoming volatility.

Historically, sudden spikes in Stock-to-Flow have often preceeded both major rallies and corrections.

This year, the sharpest rises in Stock-to-Flow occurred during the January rally and the February correction.

This year, the sharpest rises in Stock-to-Flow occurred during the January rally and the February correction.

Earlier in May, daily active addresses spiked to over 500K but has since retraced to just 28.6K. Transaction counts also dropped from the monthly highs to only 8.8K. This abrupt decline suggests that the earlier price rally may have been driven by short-term speculative interest rather than sustained utility or user growth.

Can DOGE reclaim $0.25 and sustain the breakout?

Dogecoin has the potential to reclaim $0.25 and sustain its breakout. The cryptocurrency is showing strength as it trades above the key support at $0.22.

Moreover, on-chain metrics suggest that DOGE is in a healthy condition for sustained upward action. In the past 24 hours, short liquidations were heavily skewed at $387K compared to just $65K in long liquidations.

This disparity in liquidation amounts usually accelerates price movement and puts pressure on the coin to move further in the direction of the liquidated positions. In this case, with short liquidations dominating, it suggests that there could be more downward price action.

Additionally, the MVRV Z-score stands at 0.94, which is quite low. A Z-score above 2.5 suggests overvaluation while a low score indicates that most holders are holding at a loss or in minimal profit.

Consequently, the current low reading on MVRV Z-score signals that there is little urgency for traders to sell at a loss, which in turn, could sustain the current rally.

However, despite the bullish momentum, there are also some volatility risks to consider.

On-chain activity shows a short-lived surge followed by a sharp retracement. Daily active addresses recently spiked to over 500K but have since retraced to just 28.6K. Transaction counts also dropped from the monthly highs to only 8.8K.

This abrupt decline suggests that the earlier price rally may have been driven by short-term speculative interest rather than sustained utility or user growth.

suggest that the cryptocurrency could be poised for further gains.

Moreover, derivatives data from DeFi Glass present a mixed outlook. Total volume dropped 22.05% to $3.46B, signaling reduced speculative participation. However, Open Interest (OI) rose 2.7% to $2