- Dogecoin drops 14.25% from its recent peak as traders lock in profits.
- RSI divergence indicates weakening momentum, signaling potential short-term downward pressure.
- Broader market decline, led by Bitcoin, adds to Dogecoin’s pullback challenges.
TradingView data shows Dogecoin (DOGE) has retreated to $0.412 after reaching a high of $0.480, marking a 14.25% decline. The recent correction comes after an extended rally, which propelled the token to its highest price since May 2021. This downward move coincides with a daily Relative Strength Index (RSI) reading that has hovered above 70 for over two weeks, signaling overbought conditions.
The RSI, which currently sits at 77.45, has formed a lower high compared to its earlier peak of 92.45 on November 13, even as Dogecoin’s price climbed over 22% in the same period. This divergence between price and momentum suggests that buying enthusiasm is slowing, a key indicator of potential market consolidation or correction.
Broader Market Weakness Adds Pressure
Dogecoin’s decline aligns with a market-wide pullback led by Bitcoin (BTC). After approaching the critical $100,000 threshold, Bitcoin dropped to $96,234, triggering liquidations across the cryptocurrency market. In the past 24 hours, total liquidations reached $490 million, with altcoins accounting for the majority of these positions.
Dogecoin was among the hardest-hit assets, with its futures market witnessing $31.72 million in liquidations, primarily from long positions. The over-leveraged market, fueled by excessive optimism, appears to have exacerbated DOGE’s decline as traders were forced to sell during the broader downturn.
Technical Patterns Suggest Limited Upside or Further Decline
Dogecoin’s recent price action formed an ascending triangle pattern, with resistance around $0.44. A breakout above this level, supported by rising trading volume, could potentially push DOGE toward $0.56, representing a 30% gain by the end of 2024.
However, the lack of a confirmed breakout raises the likelihood of a further pullback. If selling pressure continues, Dogecoin could test support around $0.40, a key level that could determine whether the token consolidates or enters a more significant correction.
While the long-term outlook for Dogecoin remains influenced by broader market sentiment, traders should exercise caution as technical indicators point to the possibility of short-term volatility.
