Dogecoin Challenges Short-Term Resistances

The price of Dogecoin surged by 8% today, reaching $0.2486. However, the cryptocurrency struggles to decisively break the psychological threshold of $0.25.

The price of Dogecoin (CRYPTO: DOGE) was up 8% on Wednesday, trading at $0.2486. However, the cryptocurrency faces difficulties in breaking the psychological threshold of $0.25. In this context, Dogecoin’s technical signals suggest a potential rapid decline, with the setup suggesting a possible bearish pattern - double top.

What Happened: After reaching a peak at $0.2505, the memecoin’s price entered a sideways trajectory, dropping to $0.2245 on May 11. The recent rebound of DOGE now challenges the short-term resistance, warning of the possibility of a second peak. In this scenario, a double top pattern would form on the DOGE price chart, with support found at $0.2245.

If Dogecoin’s pullback breaks below $0.2245, a conclusive closing price below this support could indicate a vigorous and abrupt correction. The price target of this bearish pattern is calculated by adding the distance between the support and the peak at the breakout level, suggesting a 10% drop towards the next psychological support of $0.20.

As Dogecoin struggles to surpass the previous peak at $0.2505, the Relative Strength Index (RSI) is dropping from the overbought zone, indicating a decline in trend momentum. This highlights a bearish divergence between RSI and Dogecoin, a signal considered highly bearish when associated with a double top.

Furthermore, the MACD and signal lines are converging after a bullish period, suggesting a decrease in trend momentum. Therefore, technical indicators forecast a bearish price outlook for Dogecoin, warning of a short-term pullback.

Point Of Interest: Due to the possibility of a significant correction, Coinglass data indicates a liquidation risk amounting to $100 million if DOGE’s price reaches $0.2278. This warns of the potential for a massive wipeout of bullish Dogecoin traders in the market.

Although Dogecoin has experienced a 50% rally since the beginning of May, technical signals suggest that the memecoin could face a correction in the near future. The risk of a bearish double top pattern, combined with the potential for significant liquidations, urges investors to exercise caution in their DOGE positions.

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