Losing this level could see Dogecoin drop swiftly to $0.048

Disclaimer: The results of the following analysis are the only opinions of the writer and should not be considered investment advice.

Dogecoin [DOGE] it has been in a downward trend since November 2021. The downward trend has been punctuated by rapid increases in double-digit percentage gains. One such rally for DOGE over the past month, when DOGE rose nearly 50% from its low of $ 0.059 to reach its high of $ 0.087 in August.

At press time, Dogecoin was precariously in a demand zone. The longer-time market structure was bearish for Dogecoin and Bitcoin also showed weakness in the charts.

DOGE- 1 day chart

Dogecoin finds a base in a support zone, but the momentum has favored the bears

Source: DOGE / USDT on TradingView

The movement of Bitcoin always has a strong impact on the performance of altcoins. Dogecoin and similar meme coins have a tendency to burst towards the end of a Bitcoin rally and to collapse harder than Bitcoin.

This seemed to have happened in mid-August when BTC’s move to $ 24,000 hit a high, but DOGE still had a chance to push from $ 0.07 to $ 0.085.

At press time, DOGE was trading at $ 0.062 and had been within a demand zone since July. Based on the price action, a move to $ 0.07 seemed plausible.

The liquidity in the pocket of $ 0.06 can be tested by another bearish wick, but until the price closes a daily session below $ 0.057, there was a possibility of an upward move.

This idea gains some credibility when we consider the fact that July and a good part of August saw DOGE hover between $ 0.063 and $ 0.07.

However, Bitcoin faces strong resistance at $ 20.4k and $ 20.8k. If BTC manages to break through these levels, Dogecoin may be able to gather momentum for an upward move.

Rationale

Dogecoin finds a base in a support zone, but the momentum has favored the bears

Source: DOGE / USDT on TradingView

Indicators showed some bearish bias for DOGE. The Relative Strength Index (RSI) has slipped below neutral 50 over the past two weeks to highlight the bearish momentum over the daily time horizon.

On-Balance Volume (OBV) did not drop significantly. Indeed, the OBV has also stood at a level of support that has been respected in recent months. The Chaikin Money Flow (CMF) showed intense selling pressure throughout August.

The Bollinger Bandwidth (BB) indicator was also on the rise. The indicator reflects the recent increase in volatility following the drop in DOGE from $ 0.085.

Conclusion

If the OBV is unable to sustain the support level over the next few weeks or two, DOGE could see a steep decline below $ 0.057. The $ 0.062 level was important in February and March 2021. Losing this level could see DOGE drop rapidly into the $ 0.048- $ 0.05 zone.

This downward move hinges on Bitcoin’s fall on the price charts. The $ 19,200-$ 19,600 is a region that BTC bulls would like to see defense.

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