Dogwifhat (WIF), the meme coin with the highest market capitalization on Solana, dropped to $1.05 on August 5. The decline sparked widespread speculation that the token would drop below $1 since March.

However, that did not happen, as WIF’s price has increased by 16.94% in the last 24 hours. Trading at $1.41, this analysis explains why the rebound may be short-lived. 

Dogwifhat Does Not Have Enough Backing

To confirm a sustained bounce, a cryptocurrency has to experience an increase in buying pressure. However, that is not the case with dogwifhat, according to signals from the Money Flow Index (MFI).

The MFI measures buying and selling pressure using the price and volume data. It swings from 0 to 100, with readings at 20 or below indicating an oversold point, while those at 80 and above are regarded as overbought.

At press time, the MFI on WIF’s daily chart is 9.31, suggesting that despite WIF’s bounce, the token is still oversold. This also implies that the current buying pressure may not be adequate to keep WIF’s price soaring. 

Read More: What Is Dogwifhat (WIF)?

If the capital flowing into the WIF cryptocurrency remains lackluster, then seeing the price rise toward $2 may be an uphill task. 

However, traders in the derivatives market do not seem to believe that WIF’s price will stall. This is according to the Funding Rate, which represents the difference between a cryptocurrency’s spot price and its perpetual price. 

On August 5, the Funding Rate slid into the negative zone, indicating that traders held a higher number of bearish positions while expecting the value to fall. However, as of this writing, that has changed, as shown in the image below.

The increase in Funding Rate and price suggests that long-positioned traders are being rewarded for their positions. 

If the price continues to jump, then Longs will continue to make profits off the price movement. However, it is worth noting that a price decrease may erase part of these gains if unrealized. 

WIF Price Prediction: Further Gains Threatened

Signals shown by the Directional Movement Index (DMI) reveal that WIF is in a largely bearish position despite the price increase. The DMI attempts to determine the strength and direction of a cryptocurrency’s price. 

Usually, a higher +DMI (green) indicates that the price will move upwards. But if the -DMI (red) is high, it indicates that the direction will most likely be downward. 

The chart seen below shows that the -DMI is far above the +DMI, suggesting that the WIF’s uptrend may only last for a while before the price retraces.

The Average Directional Index (ADX), which indicates directional strength, also supports this bias. At press time, the ADX (yellow) moves in the same direction as the -DMI, suggesting a higher downward directional strength.

Read More: 5 Best Dogwifhat (WIF) Wallets To Consider In 2024

If this remains the same, WIF’s price may retrace toward $1.04. However, if money flows into the WIF market jumps by a significant number, the token may sustain the upswing. If that happens, WIF could test $1.76 for a start.