Dogecoin (DOGE) Price Analysis: Despite a 12% Drop, the Meme Coin Shows Signs of Recovery

Dogecoin (CRYPTO: DOGE) has seen a 12% decrease in the last 24 hours and is currently trading at $0.34. The meme coin had a strong run-up in 2023, rising from around $0.08 to highs of nearly $0.15. However, DOGE has faced selling pressure from the highs and has been consolidating in recent weeks.

The sell-off has brought DOGE back to its 50 EMA, which is a key support level. The 50 EMA has acted as a floor for DOGE during the 2023 rally and could continue to provide support. Momentum is also slowing to the downside, with the 14-day relative strength index (RSI) dropping below 50.

Overall, the technicals suggest that DOGE may have room for another move to the upside. The 50 EMA and 100 EMA are converging, which could indicate a squeeze play. Volume is also picking up, which is a sign of strength.

From a derivatives perspective, open interest in DOGE futures decreased by 15.35% to $3.58 billion, suggesting a decrease in speculative activity. However, the volume of derivatives increased by 108.98% over the past 24 hours, reaching $12.07 billion. This indicates an increase in market activity as traders are reacting to the price movements.

Interestingly, the majority of the liquidations were from long positions, with over $26.98 million liquidated in a single day, suggesting an over-leveraged bullish sentiment among traders.

Taking a glance at the 4-hour chart, we can see that DOGE's price is approaching a make-or-break point. The 100 EMA is converging with the $0.29 support zone, which acts as a crucial backup area.

If DOGE fails to hold this level, it could test the 200 EMA at $0.23, which is also a long-term support level. On the other hand, a technical and psychological resistance barrier forms at $0.40.

The next target to watch on the upside is around $0.45, where a breakout could reignite the bullish momentum.

Despite the recent volatility, DOGE's community and unique market positioning offer optimism for a rebound. Historically, the asset's ability to attract retail investors during market downturns has acted as a buffer against sustained declines.

For now, traders should monitor volume and market activity closely to determine whether DOGE is setting up for another leg down or preparing for a rebound. The meme coin's current support levels will be put to the test.

Failure to hold key zones could accelerate a decline, while a bounce could pave the way for another rally. Traders are advised to proceed with caution and consider the broader market environment when making decisions.