Over the past day, Dogecoin [DOGE] did not perform to the liking of investors, experiencing a price decline. However, investors should not despair just yet, as this could be the calm before a storm. Specifically, the recent correction may simply be a reevaluation of a critical support level.
Dogecoin breaks away from a typical pattern
In the last 24 hours, Dogecoin saw a decline of over 5% in price, mainly due to bearish activity. With this correction, DOGE was trading at $0.443, boasting a market cap exceeding $65.3 billion.
This price decrease also impacted the on-chain metrics of the world’s major meme coin. Notably, its weighted sentiment decreased, signaling a surge in bearish sentiment.
The velocity of DOGE reduced, indicating decreased usage of the meme currency in transactions within a specified period. Furthermore, its MVRV ratio took a plunge, falling to 11.58%.
Nevertheless, a more in-depth analysis revealed that DOGE had successfully surpassed a bullish symmetrical triangle pattern.
This pattern emerged in November and since then, Dogecoin remained within it, breaking out on December 8th.
The recent price drop could potentially be a test of the upper trend line support of the pattern. Should Dogecoin successfully test this support, it may kickstart a new bullish rally.
DOGE’s Future Targets
Despite the recent price drop potentially being a support test, the situation might worsen for DOGE. Coinglass data indicated a significant drop in Dogecoin’s long-short ratio in the last 24 hours.
This suggests a higher number of short positions compared to long ones, pointing towards a growing bearish sentiment. Additionally, Dogecoin’s open interest remained high, indicating potential continuity of the current trend.
Nevertheless, a few other metrics painted an optimistic picture for the meme coin. For instance, at the time of writing, DOGE’s fear and greed index stood at 37%, reflecting a prevailing “fear” sentiment in the market.
Upon reaching this level, there are indications of an upcoming bullish trend reversal. If such a reversal occurs, breaking above the $0.46 resistance will be crucial for Dogecoin.
Surpassing this resistance level could propel the coin towards its all-time high. Additionally, in the event of an altcoin season, DOGE could potentially reach a new ATH in the upcoming weeks. However, a continued bearish trend could see DOGE drop back to $0.36.