- Dogecoin price has shed roughly 92% of its value from its all-time high and is currently consolidating.
- A breakout above the declining trend line could result in an explosive move to $0.089.
- However, a breakdown of the $0.047 support level could result in a steep correction.
Dogecoin price has undone all the gains amassed since the second quarter of 2021. This massive U-turn comes as the crypto markets remain susceptible to sellers and changes in the traditional finance markets.
Dogecoin price plays the balancing act
Dogecoin price set up an all-time high at $0.733 on May 7, 2021, and has since crashed 92% to form a local bottom at $0.0491 on June 18. Since then, DOGE has started its consolidation. It has stuck below the $0.089 hurdle, trading sideways and producing equal highs at this level.
Connecting the lower highs of the 92% downswing describes a trend line that has prevented the Dogecoin price from breaking out of its bearish trend at every attempt. During the current consolidation, DOGE is getting squeezed between this trend line and the $0.057 support level.
A continuation of this range tightening will soon result in an explosive move in either direction. As long as DOGE manages to stay above the $0.0471 support level, the resolution will likely be bullish.
In such a case, investors can purchase the dog-themed crypto at a discount before it escapes the declining trend line and sweeps the aforementioned equal highs formed at $0.089. A more optimistic scenario for Dogecoin price would include a retest of the $0.109 resistance level.
DOGE/USDT 1-day chart
A pessimist’s view of DOGE
Investors should act with caution when accumulating DOGE, however, as a breakdown of the $0.0471 support structure would likely trigger a steep sell-off lower, continuing the established downtrend.
Between the last quarter of 2020 and the second quarter of 2021, the Dogecoin price rallied 24,534%. During this explosive yet parabolic run-up DOGE created inefficiencies known as Fair Value Gaps (FVG), which are areas where the balance of buyers and sellers got out of whack.
Often, these gaps are rebalanced as the asset trades back into them. Therefore, a breakdown of the $0.0471 foothold could trigger a 42% nosedive to retest the upper limit of the FVG, extending from $0.0267 to $0.0140. On the other hand, if the Dogecoin price tags the lower limit of this imbalance, it would constitute a 69% loss and is likely where the downside would be capped
Note:
The video attached below talks about Bitcoin price and its potential outlook, however, this is still relevant as it is likely to influence Dogecoin price.
