DOGE Ranges Below Key Support, on Brink of Further 50% Drop?

The last two days have been unusually subdued for Dogecoin (DOGE/USD), as the meme consolidates below key support in the $0.1800 area following last week’s flash crash that saw selling across cryptocurrency markets.

To recap, last Saturday, DOGE tumbled from above $0.2000 to as low as the $0.1200s, corresponding to a decline in its market capitalisation from around $28B to at one point under $18B, but has since recovered to range between a $0.1600-$0.1800ish zone. Over the past two days, that zone has further narrowed to a mid-$0.1700s to low-$0.1800s range.

Whilst that does mark an impressive more than 40% recovery from Saturday’s lows, the cryptocurrency is still down over 15% on the month and DOGE investors are growing increasingly nervous. Since posting its record high above $0.7400 back in May, the token has shed 75%.

The meme coin is still trading higher by more than 4000% on the year, meaning the long-term HOLDers likely remain comfortable with their massive paper gains. But the long-term technicals are not looking good for DOGE/USD and there is a risk that further depreciation cold trigger a negative spiral as more recent investors seek to cut their losses.

Short-Term Stabilisation

Looking at DOGE/USD on the four-hour candlesticks sends a message of continued near-term consolidation. The token is currently trading at the top of its aforementioned recent $0.1600-$0.1800ish range, with further gains for now capped by the presence of further resistance in the form of the late-November lows just above $0.1900. This level also coincides with the late September and early August lows.

The 14-period Relative Strength index, having signalled heavily oversold conditions over the weekend when DOGE/USD tanked as low as the $0.1200s and accurately predicted a rebound/consolidation, currently indicates the crypto is neither oversold nor overbought.

Meanwhile, the 12-period exponential moving average (EMA) moved back above the 26-period EMA back on Monday, pushing the short-term MACD into positive territory for the first time since early December and giving DOGE a momentary intraday boost at the time. But the MACD has been gradually reverting to neutral over the last two sessions, indicative of a fading of momentum.

Long-Term Decline Intact

DOGE faces significant technical hurdles if it is to reverse the bearish momentum that has dominated going all the way back to the end of October. If it does manage to crack above key resistance I the $0.1900 area, it faces further challenges in the form of the November downtrend, which will likely offer resistance before it can reach $0.2000.

Then, there is the 21-day moving average, which has been well respected as either a level of support or resistance in recent months, around $0.2060.

Should the DOGE bulls fail to push the cryptocurrency above these key levels, technicians will likely deem the token’s long-term decline as intact and that could act as a sell signal to send DOGE back to key support in the $0.1600 area. This corresponds to this week’s lows, as well as an old triple printed back in April, June and July.

A break below here would open the door to a retest of Saturday’s low at $0.1245. Things would get really ropey for DOGE if sentiment towards the coin continued to deteriorate from there. A break below Saturday’s low would likely see a cascade all the way back to the next key area of support in the form of the February high, which sits sub-$0.1000.

If such a move does come into fruition, that would mark a roughly 50% decline from current levels for DOGE.