If you lose this level, Dogecoin could quickly drop to $0.048

warning: The results of the following analysis are the author’s opinions only and should not be considered investment advice.

Dogecoin [DOGE] It has been in a downtrend since November 2021. The downtrend was punctuated by quick gains with double digit gains. One of these difficulties for DOGE over the past month, when DOGE surged nearly 50% from the low of $0.059 to reach $0.087 in August.

At the time of publication, Dogecoin is sitting precariously in the demand territory. The longer time frame market structure was bearish for Dogecoin, and Bitcoin also showed weakness on the charts.

DOGE – One Day Planner

Source: DOGE / USDT on TradingView

Bitcoin movement always has a strong impact on the performance of altcoins. Dogecoin and similar meme coins tend to fall towards the end of Bitcoin’s rally and collapse stronger than Bitcoin.

It appears that this happened in mid-August when BTC’s move to $24K reached its peak but DOGE still had the opportunity to push from $0.07 to $0.085.

At the time of writing, DOGE is trading at $0.062 and has been in demand as of July. Based on the price action, a move to $0.07 seemed reasonable.

The liquidity in the $0.06 pocket can be tested by another bearish wick, but as long as the price does not close the daily session below $0.057, there is a chance for an upward move.

This idea gains some credibility when we take into account the fact that July and August saw DOGE fluctuations between $0.063 and $0.07.

However, Bitcoin is facing heavy resistance at $20.4K and $20.8K. If BTC can surpass these levels, Dogecoin may be able to gather momentum for an upward move.

Logic

Dogecoin finds some stability in the support area, but the momentum favored the bears

Source: DOGE / USDT on TradingView

Indicators showed some bearish bias for DOGE. The Relative Strength Index (RSI) has fallen below the neutral 50 level over the past two weeks, indicating bearish momentum on the daily time frame.

Unbalanced volume (OBV) has not seen a sharp decline. In fact, OBV has also stood at a support level that has been respected in recent months. Chaikin Money Flow (CMF) has shown intense selling pressure throughout the month of August.

The Bollinger Bands Supply Index (BB) also rose. The index reflects the recent increase in volatility after the DOGE drop from $0.085.

conclusion

If OBV is unable to hold the support level in the next week or two, DOGE could be set for a sharp drop below $0.057. The level of $0.062 was significant in February-March 2021. If you lose this level, DOGE could drop quickly to the $0.048-$0.05 region.

This downward movement is due to Bitcoin falling on the price charts. $19.2K – $19.6K is an area Bitcoin bulls would like to see defended.

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