Dogecoin’s [DOGE] trading volume rallies by over 400%, thanks to…

According to a securities filing on 4 October, Elon Musk sent a letter to Twitter declaring his intentions to follow through on his deal to buy the social media platform Twitter. The Tesla CEO also shared a tweet on the same.

Buying Twitter is an accelerant to creating X, the everything app

— Elon Musk (@elonmusk) October 4, 2022

Following this news, Dogecoin [DOGE] holders took to trading as the price of the Elon-backed meme token shot up by 8% in the last 24 hours.

Furthermore, as per data from the cryptocurrency price analytics platform CoinMarketCap, the meme token’s trading volume rallied astronomically by over 400% within the same period.

Data from Santiment revealed a surge in DOGE’s whale transactions and its average exchange funding rates, which are two great predictors of price direction change. 

Source: Santiment

It is common knowledge that a rally in an asset’s whale transactions count and in its average exchange funding rates are indicators of an imminent price rally. But let’s see DOGE in the last 24 hours to assess the validity of this thesis.

Buyers are market movers

According to data from CoinMarketCap, the meme token exchanged hands at $0.06492, as of this writing. Trading volume had also rallied by 428% in the last 24 hours. 

The sudden surge in price and trading volume was the most action DOGE witnessed in the last week, as per data from Santiment.

Source: Santiment

All that glitters…

On a daily chart, following the news of Elon’s offer, DOGE’s Money Flow Index (MFI) continued on its uptrend to mark its spot in the overbought region. At press time, the MFI was 82. 

DOGE’s Chaikin Money Flow toed a similar path. As of this press, the dynamic line (green) of the Chaikin Money Flow (CMF) rested at 0.05 above the center line. In an uptrend, this indicated that buying pressure for DOGE continued to increase. 

Furthermore, the Relative Strength Index (RSI) was positioned at 56.34 above the 50-neutral region at press time.

Source: TradingView

Look before you leap

On the other hand, a look at DOGE’s four-hour chart sent cautionary signals. Although still high, the positions of the MFI, CMF, and RSI showed sellers gradually returning to the market. 

Following the news of 4 October, these indicators climbed to overbought highs. Failing to sustain the momentum, the sellers have initiated a correction downwards.

At press time, RSI was 66 approaching the center line; MFI was 73, having lost its place at the overbought region, and the CMF was spotted at 0.25. 

Source: TradingView

At press time, the weighted sentiment metric was positioned in a downtrend, indicating a diminishing sentiment in the DOGE market.