Following an impressive surge that propelled Dogecoin [DOGE] to reach a multi-year peak above $0.48, the cryptocurrency is now undergoing a correction. Currently, the primary memecoin is trading at $0.39, marking a 3.49% decline over the past 24 hours.
An analysis of Dogecoin’s four-hour chart reveals a bearish trajectory with the coin trading under the 20-day, 50-day, and 100-day Exponential Moving Averages (EMAs), indicating a bearish trend in the short run.
An essential level of support is situated at the 200-day EMA ($0.34). A dip below this price point could signify a shift to a negative long-term trend.
On the lower timeframes, a signal to sell is developing as the 20-day EMA aligns with the 100-day EMA. Confirmation of this sell signal would come if the 20-day EMA drops beneath $0.41 and descends below the longer-term moving average.
The Chaikin Money Flow (CMF), currently standing at -0.02, implies active selling pressure in the market.
If the weakening trend persists and sellers continue to dominate, Dogecoin could slide towards the 1.618 Fibonacci level ($0.29).
Conversely, a significant resistance level is identified at the 0.5 Fib level of $0.42, also corresponding to the 50-day EMA. If an influx of buyers emerges following a dip, DOGE may surpass this level, reigniting its uptrend.
Are Large DOGE Holders Beginning to Cash Out?
Recent data from Whale Alert reveals that two large holders shifted 146M DOGE coins, valued at over $56.42M, to the Robinhood exchange on December 10th. This transfer suggests a potential intent to sell off holdings.
As per a report by CryptoCrypto, major DOGE holders significantly bolstered their holdings last month, influencing short-term price movements.
If these large holders begin selling at a pace comparable to their accumulation, Dogecoin risks erasing its recent gains.
Decline in Speculative Interest
On December 9th, Dogecoin’s Open Interest (OI) hit an all-time high of $4.45 billion after tripling in under a month amid escalated speculative interest in the coin.
However, within the past two days, OI has plummeted by more than $1.5 billion to $2.95 billion currently.
The drop in OI signifies traders closing their positions on Dogecoin, with diminishing market engagement also reflected in a 34% decline in derivative trading volumes to $14.23 billion at present, according to Coinglass.
This shift in the derivatives market sentiment could lead to reduced price fluctuations and push DOGE into a consolidation phase.
Market Sentiment Trends Bearish
These concerning indicators have suppressed market sentiment for Dogecoin, as illustrated by Market Prophit. Both crowd sentiment and smart money sentiment toward DOGE are pessimistic, suggesting an anticipation of further downward movements.
If the prevailing market sentiment remains subdued, it may hinder buying interest, potentially resulting in additional declines for Dogecoin.