Dogecoin in Overbought Territory: Correction Anticipated for DOGE

The popular meme coin Dogecoin (DOGE) has experienced a remarkable surge following Donald Trump's victory in the U.S. presidential elections. However, some indicators suggest that a pullback could be on the horizon for the cryptocurrency.

Let's explore what's happening with Dogecoin (DOGE) and whether the meme coin has a chance to avoid a correction.

Dogecoin Overbought

As of now, 94% of Dogecoin's total supply is in the profitability zone, indicating that the meme coin is nearing a local high. However, a significant danger awaits the cryptocurrency on its way to the peak—profit-taking. Asset holders typically start selling actively when prices rise to new heights, creating short-term selling pressure and posing a correction threat for DOGE.

Read also: Dogecoin (DOGE) and other meme coins surge following Trump's victory

Meanwhile, the Relative Strength Index (RSI) has surpassed 70.0, entering the overbought zone. This could indicate that the bullish momentum has already exhausted itself and may reverse into a pullback. This is particularly crucial for Dogecoin, as historically, the meme coin has often encountered short-term corrections after entering the overbought zone.

Analyzing this indicator again hints at the risks of profit-taking. With such RSI values, the likelihood of a correction increases, as it would be challenging for DOGE to maintain the current rally under these conditions.

Earlier, BIC's editorial team discussed how U.S. politics is linked to meme tokens. Read our research on how the U.S. presidential election results will shape the future of meme coins.

DOGE Forecast: Key Obstacle Ahead

At the time of writing this analysis, DOGE is trading at $0.1928, having surged nearly 10% in the last 24 hours. At one point, its intraday gain reached approximately 25%.

Currently, the token is moving below the key resistance at $0.20. The last time it managed to surpass this level was in mid-April. This level will be the main obstacle for Dogecoin.

If the meme coin fails to break above, it risks retreating from this barrier. In that case, DOGE could face a drop to the support at $0.17 or even lower to $0.14.

Read also: 5 Meme Coins to Watch in Novembe

If the resistance at $0.20 is successfully breached, the cryptocurrency could maintain its upward trend and negate the bearish scenario. If DOGE holds above this level, it will only strengthen its position.