The meme coin king suffered a significant loss amidst the increasing negativity in the market. But is it the right time to buy? Last week, the period of shallow volatility came to an end, and many altcoins, including Dogecoin, experienced excessive selling. Concerned investors worry that more bad news will negatively impact the markets.
Why Did Dogecoin (DOGE) Drop?
There are several reasons behind the losses suffered by the king cryptocurrency, including BTC sales. In the case of DOGE, there was also a selling motivation due to a technical breakdown. Moreover, it is widely believed that Dogecoin and other cryptocurrencies will not be used for X (formerly known as Twitter) payments in the medium term. On the other hand, we know that Musk does not want a blockchain-based social media platform and does not see it as sustainable.
The notable thing on the DOGE chart is the invalidation of the long-term declining resistance line, which has become illegitimate. The invalidation of the breakout is a strong bearish signal that could lead to further declines. Therefore, for the possibility of a bounce to remain intact, the DOGE price needs to hold above $0.060.
Will Dogecoin (DOGE) Rise?
The weekly timeframe technical analysis shows that the meme coin fell below a declining resistance line since it reached an all-time high of $0.739 in May 2021. During the descent, DOGE dropped to $0.049 in June 2022 before making a bounce. The $0.060 support was confirmed during the price bounce.
Excluding the failed breakout, the resistance line has been intact for 833 days. The next closest resistance area is at $0.150, which represents a 140% increase from the current price. Based on the current price, to become a millionaire when the price returns to its all-time high, one would need 1,357,129 DOGE tokens.
Similarly, the daily timeframe also presents a downward price prediction. The reason for this is the deviation of DOGE from an ascending parallel channel on August 15th. The breakout indicated that the previous rise was corrective and a downward movement began. The decline was swift, and DOGE dropped by 25% in just three days. Currently, the DOGE price is trading above the $0.060 horizontal support area. It is possible that it has formed a double bottom formation compared to the price in June. While this is considered a bullish formation, there were no other signs of a reversal.
In summary, if the DOGE price can hold above $0.060, it could recover to $0.150. However, closing below it could lead to a drop to $0.036.
