The critical support level for Dogecoin [DOGE] has been breached, sparking discussions on whether the meme-based cryptocurrency is poised for a robust rebound or is set to prolong its decline.
After a sharp downturn in recent weeks, DOGE is currently teetering around crucial technical thresholds that could dictate its future trajectory.
The Decline of Dogecoin and the Significance of Support Levels
DOGE has witnessed a substantial drop from its peak, with its current price at $0.25299. The 200-day moving average [MA] is now at $0.23045, serving as a pivotal support level for the digital asset.
Traditionally, Dogecoin has shown a tendency to bounce back from similar levels under favorable market conditions.
Nevertheless, if this support level proves fragile, a more pronounced correction might be on the horizon.
Analysis based on Fibonacci retracement levels indicates that DOGE has already dipped below the 0.618 level [$0.39485], a critical zone that typically dictates the continuation of trends.
The next significant support is located around $0.23045, aligning with the 200-day MA, which could function as a safety barrier for buyers.
RSI and Market Sentiment Insight
An examination of DOGE’s Relative Strength Index (RSI) reveals that the asset is nearing the oversold territory, currently standing at 33.32. Generally, an RSI below 30 suggests that an asset is heavily oversold and might be primed for a rebound.
However, prolonged bearish sentiment in the market could trigger further declines before any substantial recovery ensues.
Decline in Active Addresses: Precursor to a Rebound?
Another vital metric to consider is the Active Addresses of Dogecoin, which have witnessed a significant decrease from their peak levels.
Data indicates that the number of Active Addresses has dwindled from over 9.8 million in December to approximately 1.32 million, signaling reduced network engagement often associated with diminished speculative interest.
Although, past trends indicate that notable declines in network activity sometimes precede a recovery, especially if long-term holders begin accumulating DOGE at lower valuations.
Future Prospects for DOGE
For a bullish scenario to unfold, DOGE must maintain levels above $0.23045 and recuperate the 50-day MA at $0.32976 as a support level. A breakout above $0.36 would mark the initial indication of a potential uptrend continuation.
Conversely, if DOGE fails to sustain support at $0.23, the subsequent critical level to observe would be $0.20, a former resistance level before the late 2024 surge.
At this crucial juncture for DOGE, traders are advised to closely monitor essential technical indicators and network activity to evaluate the probability of a recovery.
The upcoming days will be decisive in determining whether Dogecoin can rekindle its momentum or is headed for further downside risks.