Next Steps for Dogecoin Traders if the Memecoin Price Falls This Way
Contributor
- After falling below the $0.11 baseline, Dogecoin approached a key support area.
- The decline in DOGE’s open interest exceeded the daily loss, suggesting a weakening of the bearish momentum.
Dogecoin’s [DOGE] reversal from the $0.22 resistance level in May this year set the stage for the bears to dominate the market. They provoked a series of red candles as the memecoin fell below its 20-day and 50-day EMA amid this bear run.
As predicted in our previous articleDOGE continued to succumb to bearish pressure and fell below the crucial support level of $0.12. A possible reversal from the immediate support area at $0.096-0.01 can stop the bleeding as bulls aim for a comeback.
At the time of writing, DOGE was trading at around $0.101.
Will Dogecoin bears continue to apply pressure ?
Bearish pressure has been quite dominant since the price action reversed from the $0.22 resistance level. The memecoin has lost over 54% of its value in the past three months amid this bearish pressure.
During this downturn, the memecoin traced a classic descending triangle structure on the daily chart. After testing the $0.129 level for over three months, the bears finally provoked a series of red candles below this baseline, confirming a breakout from a bearish pattern.
Bulls retested this level shortly after this breakout, but the 20 EMA resisted this rally as the altcoin continued its downtrend and approached the crucial $0.01-$0.096 support area at press time.
Going forward, this area is crucial to stop any immediate bleeding. In fact, an analysis of the visible range volume profile revealed that the prevailing price was on the edge of a relatively high liquidity zone. This would mean that bears would likely face resistance from bulls for further pulldowns.
As a result, any reversal from the current support area can help bulls retest the $0.11-$0.12 area. Should the price find a rally above the 20 EMA, it is likely to enter a low volatility zone.
On the other hand, any drop below the immediate support area can expose the memecoin to a fairly extended decline towards the $0.08 zone.
The Relative Strength Index (RSI) continued to fluctuate in the oversold territory at press time. Any likely reversal from the press time position will confirm the bullish reversal bias.
Open Interest Declined
According to Coinglass data, DOGE’s open interest has declined by almost 12% in the past 24 hours. However, the price fell by about 4% during this time, indicating a lack of conviction or uncertainty among traders.
Such a scenario often indicates a possible reversal or consolidation phase – a phase in which the market could stabilize before making the next move.
