Memecoins
Assessing Dogecoin Traders’ Next Steps If Memecoin Price Breaks This Way
- After falling below the $0.11 baseline, Dogecoin approached an important support zone
- DOGE Open Interest Drop Has Outpaced Daily Loss, Implying Weakening Bearish Momentum
Dogecoin [DOGE] The reversal of the $0.22 resistance level in May this year paved the way for bears to dominate the market. They caused a series of red candles as the memecoin fell below its 20-day and 50-day EMAs amid this bear run.
As expected in our previous articleDOGE has further succumbed to bearish pressure and dropped below the crucial $0.12 support level. A potential reversal from the immediate $0.096-0.01 support range may stop the bleeding as bulls strive to make a comeback.
At the time of writing, DOGE was trading at around $0.101.
Will Dogecoin Bears Continue to put pressure?
Source: TradingView, DOGE/USDT
The bearish pressure has become quite dominant since bitcoin price reversed from the $0.22 resistance. The memecoin has lost over 54% of its value in the last three months due to 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 triggered a series of red candles below this baseline and confirmed a breakout of the 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 support range of $0.01-$0.096 at press time.
Moving forward, this range is crucial to stop the immediate bleeding. In fact, an analysis of the volume profile of the visible range revealed that the prevailing price is on the edge of a relatively high liquidity zone. This would mean that the bears would likely find resistance from the bulls for further pullbacks.
Therefore, any reversal from the current support range may help the bulls retest the $0.11-$0.12 range. If the price finds a rally above the 20 EMA, it will likely enter a low volatility zone.
On the other hand, any drop below the immediate support range may expose the memecoin to a fairly prolonged decline towards the $0.08 area.
The Relative Strength Index (RSI) continued to hover in the oversold zone at press time. Any likely reversal from the position at press time would confirm the bullish reversal bias.
Open interest has decreased
Source: Coinglass
According to Coinglass data, The DOGE Open interest has fallen by nearly 12% in the last 24 hours. However, the price has fallen by about 4% during this period, implying a lack of conviction or uncertainty among traders.
Such a scenario often indicates a potential reversal or consolidation phase, a phase in which the market could stabilize before moving on to the next move.