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Meme coins Dogecoin and Shiba Inu appear to have come up against a significant supply zone that could trigger a correction.
Dogecoin and Shiba Inu are showing early signs of exhaustion after posting significant gains over the past ten days.
Despite the overall bearish market conditions, meme coins appear to have bucked the trend. DOGE has seen its market value increase by nearly 47% since Jun. 18, while SHIB has risen by more than 55% within the same period. Still, a particular technical indicator suggests that both tokens are primed for a spike in profit-taking.
The Tom DeMark (TD) Sequential currently presents a sell signal on Dogecoin and Shiba Inu’s daily chart. The bearish formations developed as green nine candlesticks, indicative of a one to four daily candlesticks correction.
Transaction history favors a pessimistic outlook for Dogecoin as resistance is more significant than support. Roughly 12,600 addresses have previously purchased over 7 billion DOGE at an average price of $0.079. Any signs of weakness could encourage these market participants to exit their positions, increasing the downward pressure behind the meme coin.
A potential spike in sell orders could validate the downswing anticipated by the TD setup as the most considerable demand zone sits at $0.064. Here, over 8,000 addresses hold 2 billion DOGE.
Likewise, Shiba Inu faces stiff resistance at $0.000012, where 6,280 addresses had previously purchased over 31 trillion SHIB. These market participants may try to sell their tokens to break even on upswings, limiting the ability for prices to continue rising.
It is worth noting that the most critical support zone for Shiba Inu sits at $0.000010. A further correction to $0.000009 appears likely if this prior level breaks.
Since the odds appear to favor the bears, traders must pay close attention to the overhead resistance for any signs of invalidation. If Dogecoin can print a daily close above $0.079, it will likely have the strength to advance to $0.089. Meanwhile, Shiba Inu would have to slice through $0.000012 to increase the probability of an upswing to $0.000015.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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