Dogecoin (DOGE), the largest meme-themed cryptocurrency by market capitalization, is holding steady near $0.070 after declining 3.5% over the past week. While the broader technical trend remains bearish, improving derivatives metrics and bullish divergences across key momentum indicators suggest that selling pressure may be easing—a setup that could support a short-term recovery if buyers successfully defend the current support zone.

Derivatives Traders Show Growing Optimism

Dogecoin derivatives traders are displaying signs of increasing confidence. The DOGE long-to-short ratio climbed to 1.25 on Tuesday, reaching its highest level in more than a month, according to data from CoinGlass. A reading above 1 indicates that long positions outnumber shorts, suggesting that more traders anticipate upward price movement.

The funding rate reinforces this sentiment. Dogecoin's funding rate turned positive on July 24 and stood at 0.0074% on Tuesday. Positive funding rates mean that traders holding long positions are paying those with short positions, which typically reflects stronger demand for bullish exposure in the perpetual futures market. Shifts in perpetual futures positioning often serve as a leading indicator of sentiment changes, as leveraged traders tend to react quickly to perceived inflection points.

Technical Outlook: Bullish Divergence Emerges

Dogecoin continues to trade near $0.070 but remains below its major moving averages, preserving a bearish near-term structure. The 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs) are positioned at $0.075, $0.083, and $0.100, respectively. These levels are expected to act as resistance during any recovery attempt.

However, momentum indicators suggest that bearish pressure is beginning to fade. On August 1, DOGE formed a lower price low while the daily Relative Strength Index (RSI) registered a higher low. This bullish divergence indicates that selling momentum is weakening despite the ongoing price decline.

The Awesome Oscillator reinforces this signal. Its recent lows have been rising even as DOGE continues to trade near its price lows, suggesting that downside momentum is losing strength.

Key Support and Resistance Levels

Immediate support is located at the horizontal level of $0.070. Should DOGE lose this level, the yearly low at $0.067 would become the next critical support. A decisive daily close below $0.067 could trigger further losses toward the psychological level of $0.065.

On the upside, the 50-day EMA at $0.075 represents the first major resistance level. Beyond that, DOGE could encounter selling pressure around the descending trendline breakout area near $0.080, followed by the 100-day EMA at $0.083 and horizontal resistance at $0.088.

A stronger recovery would require Dogecoin to reclaim the 200-day EMA at $0.100 and the major horizontal barrier at $0.102. Moving above these levels would help ease the prevailing bearish outlook.

Source: CoinJournal