As Bitcoin struggles to get back above the $69,000 resistance, and most of the altcoins are bleeding out with all the uncertainty caused by the US election, it does seem odd that the memecoins are starting to run. Dogecoin ($DOGE) is leading that run, and the top memecoins are following. Can the surge continue?
Memecoins – canary in the coalmine?
The fact that the memecoins are starting to surge could be a sign that they are the canary in the coalmine. As far out on the risk curve as you can probably get, the memecoins are possibly the first to sense, and act on the first whiff of a crypto surge or collapse.
The memecoins have become an important niche within the crypto sector, probably much to the chagrin of those more in favour of strong fundamental cryptocurrencies, and also probably to the distaste of those outside crypto who see this niche as a fool’s playground, and as detrimental to stability.
Be that as it may, when and if Bitcoin does potentially finally decide to head into the next more parabolic stage of the bull market, it is more probable that the altcoins that follow it will come from a far more select band than was the case in previous bull markets, but, also perhaps with the addition of some of the top memecoins.
Bearish divergence for $DOGE
Source: TradingView
After what must have been a very trying time for $DOGE holders, during which period the price lost more than 64% of its gains from the March local high, the price broke through the descending trendline, and has been trending up over a period of several weeks now.
However, the $DOGE price has just come up against resistance at its current level, and therefore a retracement may follow. If one looks at the Stochastic RSI on the weekly, there is definitely some concern there. The indicators look to be reaching the top, while the price is still some way off of the last local high. This is signalling strong bearish divergence, and so $DOGE holders should beware of a potential price drop to come.
$SHIB still beneath its descending trendline
Source: TradingView
Shiba Inu ($SHIB) is the second biggest memecoin by market cap after $DOGE, with a value of more than $10.4 billion. For such a crazy valuation, $SHIB really does need to to start breaking to the upside. As can be seen in the above weekly time frame, the price is still beneath the descending trendline, while it has also been rejected from the very first of the Fibonacci levels.
Also, looking out into the longer term, it will be important for $SHIB to maintain the momentum signalled by the Stochastic RSI at the bottom of the chart. If the indicator lines roll over, $SHIB holders could expect some further misery to come.
$PEPE breaks out but rolls over
Source: TradingView
While $PEPE is usually going to be one of the frontrunners whenever there is a memecoin surge, the weekly chart does not look particularly positive. After breaking strongly out of the descending trendline that began in March this year, the price then briefly rose higher over a few weeks until falling through a new shorter ascending trendline.
The $PEPE price has a measure of support where it is now, but should this break down, a descent all the way down to the major support at $0.0000059 could be forthcoming.
$WIF needs to make a higher low
Source: TradingView
Dog Wif Hat (WIF) is the crowd favourite among those with an appetite for big risk. That said, the weekly chart is another not for the faint-hearted. After breaking out of a long term descending wedge, the price initially surged strongly, but then became weaker over a period of three weeks, before testing the 0.5 Fibonacci as resistance, and then being rejected. This retracement will need to stop at some point, but the Stochastic RSI on this time frame is signalling further downside momentum. It could be that $WIF goes all the way back down to its price floor at $1.39. One positive element is that $WIF did make a higher high at just under $3. If a higher low can form, the upward trend would then not be broken.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
