Dogecoin (DOGE) experienced a 2.11% price drop over the past 24 hours, with the meme-inspired cryptocurrency now changing hands at $0.06226. This latest move lower brings DOGE down after hitting 2023 highs of $0.081 earlier this month.
In this report, we'll analyze Dogecoin's critical metrics and indicators to determine what traders should watch for next.
Summarizing The Data: Falling Prices With Moderately Low Volumes
Taking a wide lens view of the data, Dogecoin has seen declining prices across multiple timeframes including the past day, week, month, and 6 months. 24-hour trading volumes came in moderately low at $174.09 million, showing waning interest during DOGE's descent.
On an intraday basis, Dogecoin staged a minor +0.18% recovery over the past hour. However, this small upside move has so far failed to shift the overall bearish momentum.
Traders will want to see if DOGE can find its footing above the psychologically notable $0.06 level in the sessions ahead. If not, further downside looks likely.
Evaluating DOGE's Price Action on Wider Timeframes
Analyzing the longer-term picture, Dogecoin remains entrenched in a downtrend across the past month and half year. Specifically, DOGE has dropped -17.90% in the past 30 days, and a substantial -22.92% during the previous 6 months.
This sustained sell-off indicates that bears have maintained full control, as bullish sentiment and buying interest around DOGE has evaporated since the start of 2023.
Additionally, trading volumes have declined in conjunction with Dogecoin's falling prices. This reduction in activity signals that both buyers and sellers are less engaged recently. Traders want to see an uptick in volume on rallies to confirm increased commitment from the bulls.
Until that materializes, the path of least resistance remains pointed lower based on the bearish structure across longer timeframes.
Where Could DOGE Be Heading Next? Key Levels to Watch
Given Dogecoin's predominantly bearish setup on the higher timeframes, traders should remain cautious about upside prospects near-term. That said, let's look at potential support and resistance areas to watch ahead.
On the downside, DOGE shows confluence around the $0.06 level, making it a critical line in the sand for bulls. Below there, Dogecoin faces limited support until the 2022 lows near $0.045.
To the upside, DOGE will need to conquer resistance at $0.065 and then the 20-day moving average around $0.07 to signal any trend change. Beyond that area, DOGE faces additional resistance from its August highs above $0.080.
Overall, Dogecoin remains in a vulnerable position, and the path of least resistance favors a continued move lower until proven otherwise. Traders should look to sell rallies rather than try bottom-picking at this stage.
My Prediction: DOGE Likely to Violate $0.06 and Target $0.045 Next
Taking into account Dogecoin's bearish structure across the higher timeframes, I predict DOGE will break below the crucial $0.06 support in the days ahead.
The lack of buying pressure at current levels combined with waning market participation points to limited upside potential. Therefore, the path of least resistance is to the downside, with $0.045 as the next critical target.
For DOGE to invalidate this bearish outlook, it would need to rapidly attract renewed buying interest and make a decisive push above $0.07. Without a spike in positive catalysts, Dogecoin appears vulnerable to continued selling in the near-term.
Is Now a Good Time to Buy the Dip in DOGE?
With Dogecoin drifting lower, some investors may wonder if current prices present a tempting buy-the-dip opportunity. Dollar-cost averaging can help manage risks on potential long-term holdings. However, further downside looks probable in the near future.
As such, I would suggest waiting for clear signs of a bottom before building sizable long-term positions in DOGE. That said, small buys into extreme oversold conditions could pay off for investors with a multi-year time horizon and high risk tolerance.
Overall, it is generally wise to wait for the trend to shift into a new uptrend before aggressively buying dips. Catching falling knives is rarely an optimal strategy when trading. Patience and discipline will be key virtues for DOGE investors.
What Could Spark a Trend Reversal for Dogecoin?
For Dogecoin to convincingly reverse its long-term downtrend, traders will want to see specific signs of renewed buying interest entering the market.
The first signal to watch for is a bullish higher low forming, marked by DOGE putting in a clear price bottom followed by a rally to new swing highs. This would demonstrate buyers regaining control.
Additionally, an increase in trading volume during rallies would help confirm growing bullish commitment. DOGE will need to see above-average volumes on the way up to sustain upside momentum.
Finally, Dogecoin must take out multiple layers of resistance in the $0.07 to $0.08 zone before any long-term trend change is verified.DURATION CLICKERS Closing above this area opens the door for a full trend reversal.
In summary, Dogecoin likely has further to fall before bottoming signals emerge. But the ingredients are in place for bulls to regain control if buying pressure returns. Traders should patiently await clear technical evidence before calling a trend reversal.