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The Dogecoin (DOGE) price rally will be extended further on Oct. 29, hoping the cryptocurrency will get a big boost from Elon Musk’s acquisition of Twitter.
Dogecoin’s price rose nearly 75%, reaching $0.146 on October 29th. This is the largest daily gain since April 2021.
Notably, Memecoin’s massive intraday rally came as part of a broader uptrend that began earlier this week on October 25th. Overall, DOGE’s price rose 150% during his October 25-29 price hike.
This surge was also accompanied by a sizeable increase in daily trading volume. According to Santiment, this coincided with a surge in the number of his DOGE transactions above $100,000. Both indicators point to growing demand for Dogecoin tokens among wealthy investors, the so-called whales.
Dogecoin’s surge in key metrics reflects investor excitement over Elon Musk’s acquisition of Twitter on Oct. 27. The billionaire entrepreneur came up with the idea earlier this year to make Dogecoin a payment method for buying his Twitter Blue subscription.
Musk’s Tesla and SpaceX already accept DOGE payments for their goods.
$DOGEthe official currency of Twitter.
David Gokhshtein (@davidgokhshtein) October 28, 2022
Shiba Inu (SHIB), the second largest meme token by market capitalization, also posted a copycat rally.
On Oct. 29 alone, the price of SHIB jumped 30% to $0.00001519, its highest since Aug. 2022. Like Dogecoin, Shiba Inu’s rise came as part of a broader uptrend that started on his October 25th. Since then, its price has risen. 53%.
Additionally, other memecoins, such as Dogelon Mars (ELON), which rose 140%, also rose significantly during this period.
However, according to classic technical indicators, Dogecoin’s ongoing price increase is starting to look overdone.
The Relative Strength Index (RSI), a momentum indicator that determines the extent of recent price changes to analyze overbought or oversold levels, rose to 93.69 on the daily Dogecoin chart. This is his highest level since April 2021, a month before the DOGE price hit a record high of $0.75.
Therefore, an overbought condition does not necessarily mean an immediate bearish reversal. However, they reflect the current euphoric buying momentum in the market, and sooner or later prices will either tip sideways or correct downward.
Dogecoin’s 2018-2020 weekly bear market sheds light on similar price action. Notably, DOGE plummeted nearly 95% in almost two years after he peaked at $0.0194 in January 2018.
Related: Bitcoin Price Crashed This Week, Has The Trend Changed?
The token correction period saw a trend within the descending channel. Although it broke out of the range on the upside in July 2020, it continued its upside move with a sideways consolidation trend between the 0 Fib line at 0.0022 and the 0.236 Fib line at $0.0054 until December 2020.
By comparison, Dogecoin’s ongoing bear market is short, but shows a similar trend trajectory to the 2018-2020 period, as shown above. Therefore, DOGE may move within the current 0 to 0.236 Fib line range (or $0.055 to $0.176 range) following a breakout of the descending channel.
In other words, if the fractal unfolds as intended, DOGE could see a correction towards $0.055 by the end of this year, down about 60% from current price levels.
Conversely, if the 0.236 Fib line is quickly breached, DOGE’s eye could be on $0.25 as the next up target.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.
