NOIDA (CoinChapter.com)— Dogecoin (DOGE) experienced a notable increase in its price today as the memecoin recovered from a downtrend to post gains on May 27.

The unexpected return of Keith Gill, famously known for his role in the 2021 GameStop short squeeze, precipitated increased investor interest in memecoins in May 2024. Gill’s reappearance reignited enthusiasm among retail investors, drawing significant attention back to memecoins like Dogecoin.

DOGE prices dropped to a low of $0.164 before spiking nearly 5% later during trading on May 27. The sudden spike in Dogecoin prices could have forced the liquidation of short positions, resulting in a short squeeze and a further spike in prices.

Investor Interest and Market Dynamics

Keith Gill’s return has sparked a broader memecoin rally, with notable increases in other similar tokens such as Shiba Inu and Pepe. The resurgence in the memecoin sector has resulted in heightened trading volumes and positive price movements across the board.

An analysis of Dogecoin’s in/out of the money charts further supports the bullish sentiment in the market. A substantial number of Dogecoin holders are currently in profit, with a significant cluster of profitable positions around and below the current price of $0.171520.

This reduces potential selling pressure, as fewer investors are at a loss and, therefore, less likely to sell to cut their losses. However, a continued rally does risk attracting profit-booking bears, which could result in the DOGE price rally stalling.

From a technical perspective, the recent rise in Dogecoin’s price can also be attributed to market dynamics involving short squeezes. In the last 24 hours, traders liquidated nearly $700,000 worth of short positions, which forces traders to buy back Dogecoin to cover their positions, thus pushing the price up.

According to Coinglass data, an increase in the open interest of DOGE futures and a rise in funding rates indicate growing market interest and participation.

The combination of renewed investor interest and favorable market dynamics likely contributed to the recent rise in Dogecoin’s price.

DOGE Price Up Today In Anticipation Of Bullish Pattern Breakout

Another reason why DOGE price was up today could be the token getting close to breaking out of a bullish technical pattern called the ‘Falling Wedge.’

A falling wedge pattern features a pair of converging trend lines connecting lower highs and lower lows, forming a narrowing shape that slopes downward.

The pattern typically suggests that an asset’s price, while consolidating in a downtrend, is losing bearish momentum and preparing for a potential reversal to the upside. Typically, a breakout occurs in the direction of the overall trend, which, for a falling wedge, is upward.

To estimate the price target of a falling wedge pattern, traders measure the widest part of the wedge at the beginning of the formation. They then project this distance upward from the point of the breakout to set a potential target.

An accompanying increase in trading volume can further confirm the reliability of the breakout. Higher volume during the breakout suggests stronger market conviction, supporting the likelihood of a successful price reversal.

According to the rules of technical analysis, the Dogecoin price could rally over 63% to reach the pattern’s theoretical price target near $0.28.

The post Why Is The Dogecoin (DOGE) Price Up Today?  appeared first on CoinChapter.

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Filed under: Bitcoin - @ May 27, 2024 4:21 pm