Rally on this memecoin is not stopping despite problems that have appeared on cryptocurrency market
As Dogecoin’s rally continues, the famous memecoin aims even higher. As it is hard to analyze the volatile memecurrency using traditional tools, looking at DOGE from the perspective of a time-tested theory gives us some useful hints.
Elliot’s wave theory on DOGE
According to the theory developed by Ralph Nelson Elliott, markets move in identified, recurring fractal wave patterns. By knowing and identifying these patterns, investors are able to forecast for how long an asset will be moving upward and when the rally will end.
This method of analysis can sometimes be useful when other indicators that usually work on the rallying market are no longer reliable or do not show any information that would help investors to determine their next move.
Since Dogecoin’s rally was as explosive as one would expect from a volatile memecoin, most lagging indicators cannot catch up with the massively rallying price, and the only things left for investors are volume indicators and analysis methods like Elliot’s waves.
According to the last one, Dogecoin is currently transitioning from the second to the third wave, which should be the biggest price spike for the Doge-themed cryptocurrency in this growth cycle. However, there is a catch.
The wavelike pattern is considered valid only if the second wave on the market is corrective. In the case of DOGE, the asset had no chance to go through at least a short-term correction that would cool down the asset and allow it to go further without being heavily overbought.
Since the third wave is usually considered the strongest on the market, DOGE would need enormous inflows from investors in order to proceed further on the market. Since it is already overheated with fresh investments, the chance of the invalidation is rising exponentially, and we might face an unexpected reversal, even in the growth phase.
Crypto market is losing power
The recovery of the market everyone was urging on might be coming to an end, as the volatility on the majority of digital assets has been slowly going down, which is the first mark of an upcoming reversal.
With the volatility slowly evaporating from the market, investors become more conservative and tend to avoid providing additional inflows. According to volume profiles, we are already seeing this tendency slowly covering the markets.
Ethereum has lost more than 50% of the volume it had on Oct. 25, which causes a lack of momentum on the market, despite the funding provided by whales. In the last two days, ETH lost around 5% of its value, and the current price performance shows that it is not getting the support it needs for the continuation of the rally.
At press time, most assets are showing up mild against a 5-10% price increase in the last 24 hours, with a distinctive volume downtrend that will most likely cause a correction in the upcoming days.