Dogecoin Price Drops Below Key Support, Raising Concerns of a Deeper Correction

Dogecoin price has validated a vital Double Top breakdown, raising concerns over a possible reversal to the $0.20 psychological support level.

Dogecoin price has dropped below a key support level, confirming a Double Top pattern and potentially setting the stage for further declines.

Dogecoin price has broken a critical level of support at $0.2225, confirming a Double Top pattern on the four-hour time frame. This breakdown was caused by a decisive close at $0.2185, which indicates that the bullish steam has lost momentum following a strong 35% rally last week.

This downward movement under the neckline hints at a deeper correction and possible testing of the $0.20 psychological support zone.

In addition, the bearish trend is supported by technical indicators. The 4-hour Relative Strength Index (RSI) has plunged from the overbought zone to the midline sharply, which means losing buying pressure. Furthermore, the 50-day EMA at $0.2091 is now in sight as the next potential support measure should selling pressure continue.

When approaching the $0.20 support level for DOGE, the traders are keenly watching the technical zones. At the current bearish trend, a level below $0.20 may expose the psychological level of $0.18, which is in line with the 200-day EMA, and has previously been reinforced during substantial bearish trends.

However, a strong rebound for Dogecoin price above the $0.2225 neckline may invalidate the bearish Double Top pattern and restore bullish pressure. This scenario could see Dogecoin retest the $0.2506 level, a critical resistance zone that previously acted as a ceiling during the February correction.

More so, derivatives data also suggest the increasing bearish sentiments. CoinGlass data showed that DOGE long liquidations have gone up to $21.72 million in the last 24 hours, up from $20.7 million liquidations in the same period the previous day.

This indicates an increase in exits by traders as prices fell. In the last four hours, there were $3.38M of long liquidations for Dogecoin, showing that bearish dominance is high.

Additionally, the long/short ratio also presented a bearish bias. While Binance has a DOGE/USDT long/short ratio of 2.5971, OKX’s DEOG ratio is 2.67, implying that even with the recent selling, many cases of traders holding long positions still exist and can magnify the downside risk if selling continues.

At the same time, the 24-hour volume of Dogecoin derivatives has decreased by 29.25% to $6.92 billion, and open interest has decreased by 1.13% to $2.86 billion, indicating less speculative activity.

Despite short-term bearish signals, some analysts maintain a cautiously optimistic view for Dogecoin. Crypto Analyst Ali Martinez recently observed that Dogecoin is testing a crucial resistance level between $0.2490 and $0.27, which could produce a massive breakout if broken.

However, with Bitcoin struggling to maintain its recent gains and broader market sentiment remaining fragile, DOGE price path forward remains uncertain.

Recently, analysis indicated that despite its recent 5.8% pullback, Dogecoin was in a bullish structure. A reversed head and shoulders formation spotted by Trader Tardigrade implies a possible recovery, provided that the $0.225 support level is maintained.

In addition, Rekt capital observed a critical weekly close above the pre-halving highs, suggesting potential gains towards the $0.27 to $0.30 region.