Dogecoin (DOGE) Experiences Volatility Following a 7% Decline: Can It Maintain Key Support Levels?

Dogecoin (DOGE) recently encountered a setback, dropping 7% in price, which raised concerns among traders about maintaining critical support levels. With a marked increase in trading volume and liquidity events, the cryptocurrency's price movements are under close scrutiny.

Key Takeaways

Dogecoin opened at $0.1378 but fell to $0.1246 before trading at $0.1270.
Trading volume surged by 183% to $1.76 billion, with liquidations at $35.13 million in 24 hours.
Technical analysis shows strong bearish patterns, suggesting DOGE could test support at $0.1256.
Momentum indicators currently indicate weak buying interest, yet the asset remains oversold, potentially setting the stage for a minor recovery.

DOGE price (Source: CMC)

Dogecoin (DOGE) Experiences Volatility Following a 7% Decline: Can It Maintain Key Support Levels?

Current Price Action

Today, Dogecoin started trading at a high of $0.1378 but experienced a bearish shift, plunging to a low of $0.1246. As of now, DOGE is priced at $0.1270, with trading volume soaring by 183% to $1.76 billion. The market has also seen a notable 24-hour liquidation amounting to $35.13 million.

Examining the 4-hour trading chart, Dogecoin is exhibiting a bearish pattern and could potentially drop towards the support level at $0.1256. If it loses more momentum, the bears may gain control, pushing the price further down below $0.1242. On the other hand, if the bulls regroup, there might be an effort to reclaim the nearest resistance at $0.1284. A successful rally could send DOGE's price up towards $0.1298 or even higher.

Technical Analysis Highlights

The current bearish momentum is indicated by the position of the Moving Average Convergence Divergence (MACD) line and its signal line, which are both below the zero line. This suggests that sellers are in control. If these lines start to rise, it may signal a potential shift in trend.

DOGE chart (Source: TradingView)

Additionally, the Chaikin Money Flow (CMF) indicator for Dogecoin is at -0.06, indicating a slight capital outflow as selling pressure surpasses buying interest, which implies weak demand. However, since it's close to zero, the trend isn't strongly bearish and could change.

The Bull Bear Power (BBP) for DOGE sits at -0.01434, depicting very weak bearish pressure. The sellers hold a small advantage, yet the reading close to zero indicates a balance between buying and selling forces. A further decline could give strength to the bearish trend.

The daily Relative Strength Index (RSI) stands at 23.10, indicating that Dogecoin is significantly oversold at the moment. This strong selling pressure could set the stage for a possible short-term rebound if buyers enter the market. Traders will be watching for divergences or a move above 30 to confirm any recovery signals.

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