Dogecoin's price has been in a downtrend since the second week of May and has failed to establish a convincing price swing high. However, the DOGE price action from April 15 to date shows the formation of a bearish pattern level that projects a massive downside.
On-chain metrics point to failing support levels that could flip to the resistance level, further credence to the bearish thesis.
Dogecoin price is in a multi-month inverse head-and-shoulders pattern level. This technical formation contains three distinctive peaks. The one in the middle is typically higher than the other two and forms the “head.” The slightly lower swing highs of equal height create the “shoulders pattern.”
Dogecoin price sliced through the trend line connecting the swing lows of the peaks, known as the “neckline” on June 15, signaling a breakout.
This setup’s target is obtained by measuring the distance between the head and the neckline and adding it to the breakout point at a price of $0.311, which puts Dogecoin price at $0.137.
Although the meme coin has already crashed 38% since the breakout, the price recovery has pushed the Dogecoin price closer to the neckline level. However, the possibility of a further price downswing cannot be ignored, at least from a technical perspective.
Therefore, a potential spike in selling pressure that pushes DOGE price to produce a lower low below $0.193 will signal the continuation of the downswing toward the projected target at a price of $0.137. This move would represent a 45% crash from its current position, $0.258.
The IntoTheBlock’s Global In/Out of the Money model adds credence to the bearishness displayed from a technical standpoint. This on-chain metric reveals that roughly 124,000 addresses that purchased 8.61 billion Dogecoin at an average price of $0.261 will be “Out of the Money” if the meme-themed crypto produces a decisive close below $0.242.
If this were to happen, panicking investors might sell their holdings to break even or prevent an increased loss. Such a move could cascade and exacerbate the sell-off, pushing Doge price to the immediate support level cluster at $0.180, where roughly 106,500 addresses hold nearly 13.56 billion DOGE.
Moreover, any short-term buying pressure might face headwinds from the underwater investors present above the current DOGE price level.
The bull run that began in 2021 picked up in February, slowed down up to early April, but caught fire in mid-April, pushing many altcoins to new all-time highs. Despite DOGE having one of the best performances this bull run, its prospect as a meme coin dwindled.
Perhaps, the main reason for this is the increased dog coins like Shiba Inu, Akita, SafeMoon, and so on. The new tokens are extremely popular and were relatively less expensive than Dogecoin, which as a group siphoned many retail investors away from DOGE.
With investors shifting to newer meme coins, so did the capital, which might explain the almost zero social volume for Dogecoin.
This metric tracks the number of mentions on Twitter, Telegram, Discord, and other platforms. The higher the social volume for Cryptocurrency, the more investors are talking about it and are investing in it. Currently, Dogecoin's social volume stands at 121, in contrast to 177 for Shiba Inu and 53 for SAFEMOON, suggesting that buyers are clustered more toward SHIB than Dogecoin.
While one can speculate that this shift might have also triggered capital rotation, it cannot be portrayed with the utmost certainty.
Therefore, if investors continue to book profit, DOGE price is likely to create a lower low below the recent swing low at a price of $0.193. If this were to occur, market participants could expect DOGE to continue its descent to a price of $0.137, the target projected by the inverse head-and-shoulders pattern.
On the other side, if the bid orders continue to pile up, pushing the Dogecoin price to produce a decisive close above the neckline at a price of $0.311, it will invalidate the bearish scenario while signifying the bulls’ strength and indicating the willingness to move price higher.
In such a case, investors can expect the DOGE prices to climb 21% to $0.379.
0 Comments