Dogecoin [DOGE] has come to a crucial support level, sparking discussions on whether the meme-based cryptocurrency could initiate a robust bounce-back or continue its downward trend.
Following a sharp drop in value in recent weeks, DOGE is now situated around pivotal technical thresholds that could shape its future trajectory.
Dogecoin’s Decline and the Significance of Support Levels
DOGE has undergone a notable decline from its peak, currently priced at $0.25299 at the time of writing. The 200-day moving average [MA] is positioned at $0.23045, serving as a critical support level for the digital asset.
Historically, DOGE has shown resilience from similar levels during favorable market conditions.
Nevertheless, if this support fails to hold, a more substantial correction might be in the offing.
Fibonacci retracement levels indicate that DOGE has already fallen below the 0.618 level [$0.39485], a significant zone that often dictates trend continuation.
The subsequent primary support stands near $0.23045, aligning with the 200-day MA, potentially acting as a safety barrier for buyers.
RSI and Market Sentiment Analysis
An examination of DOGE’s Relative Strength Index (RSI) revealed that the asset is nearing oversold territory, currently at 33.32. Typically, an RSI below 30 suggests an asset is heavily oversold and ripe for a rebound.
Nonetheless, sustained pessimism in market sentiment could trigger further declines before any substantial recovery occurs.
Decline in Active Addresses – Possibility of a Rebound?
Another critical metric to consider is Dogecoin’s Active Addresses, which have witnessed a significant drop from their peak levels.
Data indicates that Active Addresses have dwindled from over 9.8 million in December to approximately 1.32 million.
This decline implies reduced network activity, often linked to diminished speculative interest.
However, historical patterns suggest that substantial declines in network activity sometimes pave the way for a recovery, particularly if long-term investors begin accumulating DOGE at lower price points.
Future Outlook for DOGE
For a bullish scenario to materialize, DOGE must maintain levels above $0.23045 and reclaim the 50-day MA at $0.32976 as a support level. A breakout above $0.36 would be an initial indication of a potential uptrend continuation.
Conversely, if DOGE loses support at $0.23, the subsequent key level to monitor would be $0.20, which previously acted as resistance before the late 2024 rally.
Given DOGE’s critical position, traders should monitor essential technical indicators and network activity to evaluate the likelihood of a recovery. The upcoming days will be pivotal in determining whether Dogecoin can regain traction or face further downside.