Dogecoin traders may enter short positions if this scenario continues

Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is the opinion of the author only

  • The market structure has turned bearish recently
  • The momentum was strong on the bears side

Since December 5th, the USDT (Tether) measure of dominance has increased from 7.94% to 8.26%, an increase of almost 4%. This showed that market participants fled from holding cryptocurrencies to stablecoins. Dogecoin reached a local high of $0.1119 on December 5.

Read Dogecoins [DOGE] Price forecast 2023-24

Over the next week, the bearish notion was once again supported by price action in addition to technical indicators. If Bitcoin also notices weakness in the next few days, fear could grip the market and Dogecoin could reach November lows.

Dogecoin presents the possibility of a downward movement, and traders can wait for the trigger to enter positions

Source: DOGE / USDT on TradingView

The red box at $0.089 was a bullish order block formed on November 26. It was tested on November 28 and saw a strong bullish reaction from DOGE. The price rose to $0.11, a move of about 22%.

The past few days of trading saw Dogecoin break below the $0.094 support level and test the order block again. However, the candlestick at $0.085 in the past few hours was not an encouraging sign. She indicated that the bulls may have lost the battle.

Over the next day or two, a move below $0.0888, followed by a retest of $0.089 area could provide a selling opportunity. The previous bullish command block may turn into a bearish break. Sellers can take profits at $0.083 and $0.073. Meanwhile, invalidating this downtrend would be a move back above $0.09.

This trade was relatively low risk. The Relative Strength Index (RSI) has fallen below the neutral 50 recently indicating the potential for a bearish move. Unbalanced Volume (OBV) has been gradually declining over the past week.

Dogecoin is trading at a win or breakout level but did the RSI give the plot?

Source: feeling

The resting spin experienced sharp peaks on November 10 and July 21. Both times, the rally was time-wise close to a significant price move on Dogecoin. But since the November peak, another one has not yet appeared, although DOGE has recorded huge losses in recent days.

The 30-day market value to realized value (MVRV) has been a more reliable indicator of local peaks in recent months. Its rally past the 10% mark has occurred three times since July and has been followed by sharp price declines all three times. At the time of writing, MVRV is back in negative territory, but this may not signal the end of a short-term downtrend.

A retest of the downside break, if it occurs, could be a catalyst for short selling. News in the broader economic field and global indices may also have an impact on the performance of the crypto market over the next couple of weeks.

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