Why DOGE traders should be wary of a double-digit price drop
- DOGE showed a bearish bias despite the 16% rally a couple of days ago.
- The sentiment was bearish in the futures market after the losses of the past ten days.
Dogecoin [DOGE] showed strong signs of a bearish trend reversal. Its market structure and momentum were bearish and losses of 12%-22% appeared likely based on its price action of the past ten days.
The baseless assertion that Kabuso, the Dogecoin mascot, had passed away on 10th January saw prices climb to the $0.083 mark. AMBCrypto verified that this was not the case and highlighted the memecoin’s social metrics.
The volatility was not wholly unexpected
The 12-hour price chart above showed that the $0.085 region was a stiff resistance back in mid-November. In early December the region was flipped to support and was defended for a month thereafter.
The intense selling on 3rd January saw this region converted to a supply zone once more. It was retested as resistance on 11th January. The bulls attempted to drive prices past $0.087 but failed. The H12 market structure and momentum based on the RSI showed the bears were dominant.
On the other hand, the OBV has ticked upward over the past week. Despite the downtrend of the past two weeks, it has not taken a large hit. This suggested that selling volume was not heavy. However, traders can expect losses to continue.
The Fibonacci levels (pale yellow) showed that the 61.8% level served as resistance during the attempted rally. The subsequent rejection meant that the 23.6% southward extension level is the next target.
The uptick in spot buying might see another bounce
Since 3rd January, the Open Interest behind DOGE contracts has dwindled from $400 million to stand at $282 million. This slide combined with the drop in prices pointed toward bearish sentiment and discouraged longs in the futures market.
Realistic or not, here’s DOGE’s market cap in BTC terms
However, since 9th January the spot CVD saw a minor jump upward. This was a sign of demand.
If the buyers can maintain this, it could entice futures traders into entering the market and could drive DOGE higher. The $0.08188 and $0.0835 levels are important resistances in the lower timeframes.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.