The Dogecoin (DOGE) price rally was extended further on Oct. 29 with the hope that the cryptocurrency would receive a major boost from Elon Musk’s acquisition of Twitter.
Elon Musk boosts the price of Dogecoin again
Dogecoin price jumped nearly 75% to hit $0.146 on Oct. 29, the biggest daily gain since April 2021.
Notably, the meme-coin’s huge intraday rally came as part of a broader uptrend that began earlier this week on Oct. 25. In total, the DOGE price gained 150% during the October 25-29 price hike.
The rise was also accompanied by a considerable increase in their daily trading volumes. This coincided with a spike in the number of DOGE transactions exceeding $100,000, according to Santiment. Both indicators suggest a growing demand for Dogecoin tokens among wealthy investors, or so-called “whales”.
The jump in major Dogecoin metrics reflects investor excitement over Elon Musk’s takeover of Twitter on Oct. 27. At the beginning of this year, the billionaire businessman had flirted with the idea of making Dogecoin a payment method to purchase the Twitter Blue subscription.
Musk’s Tesla and SpaceX companies already accept payment with DOGE for their products.
$DOGEthe official currency of Twitter.
— David Gokhshtein (@davidgokhshtein) October 28, 2022
Shiba Inu, meme-coins follow DOGE
Shiba Inu (SHIB), the second largest meme token by market capitalization, also posted a copycat rally.
On October 29 alone, SHIB price jumped 30% to $0.00001519, its highest level since August 2022. Like Dogecoin, The Shiba Inu rally came as part of a broader uptrend that began on October 25. Since then, its price has gained 53%.
Additionally, other meme coins have jumped massively in said period, including Dogelon Mars (ELON), which rallied 140%.
Most Overbought Dogecoin Since April 2021
However, the current Dogecoin price rally is starting to look overblown, according to a classic technical indicator.
The Relative Strength Index (RSI), a momentum indicator that determines the degree of recent price swings to analyze overbought or oversold levels, has risen to 93.69 on Dogecoin’s daily chart. This is the highest level since April 2021, a month before DOGE price surged to its all-time high of $0.75.
Therefore, “overbought” conditions do not necessarily mean an immediate bearish reversal. But they do reflect the current euphoric buying momentum in the market, which sooner or later pushes the price into a sideways trend or downward correction.
The 2018-2020 Dogecoin bear market on a weekly chart sheds light on similar price action. Notably, DOGE plunged nearly 95% nearly two years after reaching a high of $0.0194 in January 2018.
The token’s correction period saw it trending within a descending channel. It broke out of the range to the upside in July 2020, but followed the upside with a sideways consolidation trend — between its 0 Fib line of $0.0022 and $0.236 Fib of $0.0054 — until December 2020.
Comparedthe ongoing Dogecoin bear market is shorter, but shows a trend trajectory similar to the 2018-2020 period, as shown above. Therefore, DOGE may fluctuate within its current range of the 0-0.236 Fib line (or $0.055-$0.176 range) after its breakout of the descending channel.
In other words, DOGE could correct towards $0.055 later this year, about a 60% drop from current price levels, if the fractal plays out as intended.
Conversely, an immediate break above the 0.236 Fib line could see DOGE target $0.25 as its next upside target.
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