Dogecoin [DOGE] sinks to support zone as momentum turns bearish

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• Dogecoin sank to a strong support zone.
• A reversal was possible, but BTC cooperation would be necessary.

Dogecoin [DOGE] rallied from the $0.079 level on 10 February to reach $0.092 on 16 February. While this rally amounted to 16% from the swing low to the swing high, it met stiff resistance at $0.089. In the past few days, these gains were almost fully retraced.

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

Bitcoin [BTC] ran into some resistance just beneath the $24k mark on Monday. Its lower timeframe structure was bearish, and another 5% drop was a possibility. What could such a dump mean for DOGE traders?

The range lows are tested yet again

Source: DOGE/USDT on TradingView

Dogecoin has traded within a range between $0.08 and $0.099 for six weeks, since mid-January. At the time of writing, the price was close to the lows of the range. The RSI on the daily chart was also bearish. Its attempt to climb back above neutral 50 during the rally to the mid-range mark was thwarted after the price faced rejection. The bias would flip bearish if the daily session closed beneath the range lows.

The OBV has been in decline throughout February. This suggested that selling pressure was strong, and the dominance of the sellers could drive prices further lower. However, trading volume has also fallen alongside the prices. This highlighted the lack of a strong long-term downtrend. Therefore, it was possible that DOGE could witness a bounce.

Whether there is a surge in prices or a sharp decline, two things were true. The $0.078-$0.08 zone has offered steady support over the past month. It offered a good risk-to-reward buying opportunity, with a clear invalidation on a daily close below $0.078. Hence, aggressive traders can consider buying Dogecoin at these levels.

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The age-consumed metric showed strong selling pressure over the past two weeks

Source: Santiment

The 90-day MVRV sank over the past two weeks in the face of rising sell pressure. This indicated profit taking, and the metric was back in negative territory. The 90-day dormant circulation did not see any noticeable spikes, with the previous upward moves being on 17 February and 10 February before that.

The age consumed metric also saw a spike on 24 February, when Dogecoin sank to $0.08. In the coming days, another spike on either metric could indicate strong selling pressure and could see a sharp southward move on the price charts.