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The Dogecoin (DOGE) price rally extended further on Oct. 29 in hopes that the cryptocurrency would get a major boost from Elon Musk’s Twitter acquisition.
Elon Musk boosts Dogecoin price again
Dogecoin price jumped by nearly 75% to reach $0.146 on Oct. 29, the biggest daily gain since April 2021.
Notably, the meme-coin’s massive intraday rally came as a part of a broader uptrend that started earlier this week on Oct. 25. In total, DOGE’s price gained 150% during the Oct. 25-29 price rally.
The surge was also accompanied by a decent increase in its daily trading volumes. That coincided with a spike in the number of DOGE transactions exceeding $100,000, according to Santiment. Both indicators sugges a growing demand for Dogecoin tokens among rich investors, or so-called “whales.”
The jump across Dogecoin’s key metrics reflect investors’ excitement about Elon Musk’s Twitter acquisition on Oct. 27. Earlier this year, the billionaire entrepreneur had flirted with the idea of making Dogecoin a payment method to purchase the Twitter Blue subscription.
Musk’s Tesla and SpaceX already accept DOGE payments for their merchandise.
$DOGE, the 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, posted a copy-cat rally as well.
On Oct. 29 alone, SHIB’s price jumped by 30% to $0.00001519, its highest level since August 2022. Like Dogecoin, Shiba Inu’s rally came as a part of a broader uptrend that started on Oct. 25. Since then, its price has gained 53%.
Additionally, other meme coins have jumped massively in the said period, including Dogelon Mars (ELON), which rallied 140%.
Dogecoin most overbought since April 2021
Dogecoin’s ongoing price rally is starting to look overstretched, however, according to a classic technical indicator.
The relative strength index (RSI), a momentum indicator determining the degree of recent price changes to analyze overbought or oversold levels, has risen to 93.69 on the daily Dogecoin chart. This is the highest level since April 2021, a month before the DOGE price rallied to its record high of $0.75.
Therefore, the “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 prompts the price to trend either sideways or correct downward.
Dogecoin’s 2018-2020 bear market on a weekly chart sheds light on similar price action. Notably, DOGE crashed by almost 95% almost two years after peaking at $0.0194 in January 2018.
Related: Bitcoin price broke out this week, but has the trend changed?
The token’s correction period saw it trending inside a descending channel. It broke out of the range to the upside in July 2020 but followed the upside move with a sideways consolidation trend — between its 0 Fib line of 0.0022 and 0.236 Fib line of $0.0054 — until December 2020.
In comparison, Dogecoin’s ongoing bear market is shorter but shows a similar trend trajectory to the 2018-2020 period, as shown above. Therefore, DOGE may fluctuate inside its current 0-0.236 Fib line range (or the $0.055-$0.176 range) following its descending channel breakout.
In other words, DOGE could correct toward $0.055 by the end of this year, down about 60% from current price levels, if the fractal plays out as intended.
Conversely, an immediate breakout above the 0.236 Fib line could have DOGE eye $0.25 as its next upside target.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.