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Analysis

DOGE falls below $0.06, here’s why traders can look to short the memecoin

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On Monday, 9 October, DOGE’s price action saw the memecoin fall beneath the $0.06 mark, flipping it to a region of resistance. Will sellers consider shorting?

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Dogecoin falters at the $0.06 block as selling pressure rages on
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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

  • DOGE fell below a bullish order block
  • This could pave the way for further losses in the short-term

Dogecoin [DOGE] saw an intense wave of selling on 9 October that saw prices breach a demand zone that stretched back to June. This did not bode well for long-term buyers as it underlined the bulls were exhausted.

Read Dogecoin’s [DOGE] Price Prediction 2023-24

A technical analysis report of Dogecoin by AMBCrypto dated 5 October noted that the firm bearish market sentiment could see the bears breach this support zone. It proved true, and now traders could look for opportunities to go short.

The breach of the bullish order block presented an ideal opportunity for bears to short

Dogecoin falters at the $0.06 block as selling pressure rages on

Source: DOGE/USDT on TradingView

The red box demarcated a former H4 bullish order block in the $0.06 territory. Monday’s (9 October) price action saw the meme coin fall beneath this region, flipping it to a bearish breaker block. This move also signaled where DOGE could be headed next.

A set of Fibonacci retracement levels (pale yellow) were plotted based on the late September rally. This rally went from $0.0593 to $0.0642 before the sellers forced a retracement. The inability to defend the 78.6% retracement level at $0.0604 meant Dogecoin would likely fall to the 23.6% and 61.8% southward extension levels.

Hence traders can look to enter short positions upon a retest of the bearish breaker block. The Relative Strength Index (RSI) showed strong downward momentum and the On-Balance Volume (OBV) was in a downtrend in October. Together they reflected the bearish dominance of the past ten days.

Traders showed anticipation of further losses for Dogecoin

Dogecoin falters at the $0.06 block as selling pressure rages on

Source: Coinalyze

The spot Cumulative Volume Delta (CVD) was relatively flat from 5 October to 9 October but plummeted lower on Monday (9 October). This came alongside a Bitcoin [BTC] fall to the $27.4k mark. The Open Interest (OI) chart also noted a steady decline over the 24 hours before press time.

Is your portfolio green? Check the Dogecoin Profit Calculator

The falling OI pointed to discouraged longs in the futures market and captured bearish sentiment. Additionally, the lack of demand in the spot market was alarming. Therefore, expectations of further losses for Dogecoin were justified. Short sellers must beware of a Bitcoin rally as this could swiftly shift the market sentiment and break the bearish structure.

 

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Akashnath Sumukar works as a Senior Journalist at AMBCrypto. Based in Chennai, India, he has been an avid follower of the cryptocurrency market since Bitcoin’s boom and bust cycle of 2017. A graduate in Chemical Engineering, he is an expert in technical analysis. In fact, Akashnath has a particular interest in reading price charts and predicting how an asset will move over the short and long term. A self-taught trader and as someone who holds cryptos himself, he is always on the lookout for the next opportunity he can possibly capitalize on, while also educating his audience.
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