Here’s why Dogecoin must recover $0.08 to offer buyers any hope
Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Pullback below 78.6% meant Dogecoin could trade range bound
- Long positions have spiked en masse in December so bulls need to remain cautious
Bitcoin had a quiet couple of days as volatility died down over the weekend. He could come back strong on Monday. Stock indices like the S&P 500 have been bearish for the past week, and December 19 could set the trend for the next week.
Read Dogecoin [DOGE] Price prediction 2023-24
Dogecoin fell back to a support region at $0.072 and experienced a 4% bounce over the past two days, but open interest was weak. However, it still faced resistance at $0.08, a level that has been significant for the past month. Can the bulls recapture this level and push higher?
A bullish order block rescues Dogecoin, but this could not be more than a temporary reprieve
Based on the late November move from $0.071 to $0.119, a set of Fibonacci (yellow) retracement levels were drawn. At the time of writing, the price has sunk below the 78.6% retracement level. It found a bullish order block, marked in cyan, above the support level of $0.072.
The near full retracement meant that Dogecoin was probably range trading and not in a strong trend. The Relative Strength Index (RSI) swung from strongly bullish to strongly bearish momentum despite DOGE not showing a longer-term trend since mid-November. On-Balance Volume (OBV) also sank below a support level since late November.
Together, they suggested that the sellers were dominant. A daily session closing below $0.071 would likely start a bear leg for DOGE. However, the brave bulls may look to bid the asset within this zone.
The $0.8 level was flipped to support before the rise to $0.119 a couple of weeks ago. As a horizontal level and as a Fibonacci retracement level, it mattered. A retest as support in the coming days may offer a buying opportunity. Take profit targets would be the break down at $0.091 and the highs of $0.11. Below $0.072, the next level of support lies at $0.065.
Open interest saw a small increase over the weekend and the funding rate remained positive
Since the beginning of December, Dogecoin has seen a session with a sharp drop in prices. These were accompanied by the liquidation of millions of dollars worth of long positions. Along with the decline from $0.119 on December 5 to $0.075 on December 16, open interest also saw a decline.
This indicated that long positions were discouraged. The funding rate remained in positive territory, which also showed that the majority of the market did not begin to accumulate short positions.