Dogecoin Value Slips Amid Growing Bearish Divergence and Rising Bitcoin Dominance
Summary:
Dogecoin (DOGE) experiences a value decline, paralleling the downturn in the broader cryptocurrency market. This downturn involves a growing bearish divergence and is influenced by the rise in Bitcoin's dominance in the crypto market. There's also evidence of a bearish rejection at one of Dogecoin's key resistance levels. The DOGE's fall coincides with a decrease in the supply managed by the wealthiest investors. From a technical perspective, for the DOGE to rebound, it needs to exceed the upper trendline of its current descending triangle setup.
Dogecoin (DOGE) is experiencing a decline in value today, reflecting the overall downturn seen across the cryptocurrency market. Today, Nov. 28, DOGE's value took a 3.5% dip to $0.076, a more significant drop compared to the 1.25% seen by the broader crypto market over the same span. This decline in Dogecoin's value is part of a wider downward correction, with a roughly 12.5% fall observed over the past week. Now, let's delve into the probable causes of Dogecoin's latest downturn.
A notable aspect of Dogecoin's downturn today is an escalating bearish divergence - a growing disconnection between its price and a crucial momentum indicator. Importantly, Dogecoin's price saw a surge, creating higher peaks from Oct. 6 to Nov. 17. Concurrently, its daily relative strength index (RSI) saw a reduction, creating lower peaks.
This divergent trend, featuring rising prices and decreasing RSI, suggests vulnerability in the current upward trend, leading traders to safeguard profits at local price highs.
Today's Dogecoin price decline is also part of an overall decrease in the altcoin market value vis-a-vis Bitcoin (BTC). The Bitcoin Dominance Index, which evaluates Bitcoin's market share against the aggregate weight of all altcoins, has risen 0.83% in the past day. In layman's terms, traders are shifting their investments from altcoins to Bitcoin. Comparatively, Dogecoin's market predominance against the rest of the crypto market fell by over 1% on Nov. 28.
The reduction in Dogecoin's price today also seems to stem from a bearish dismissal by one of its strongest dispersal areas. Specifically, DOGE's value took a downturn after retesting the 0.236 Fibonacci line nearby the $0.081 resistance line. Since May 2023, its effort to close above this specific price point has been unsuccessful.
Consequently, it's highly probable that DOGE will continue this downward motion into December 2023, with its 50-day exponential moving average (50-day EMA; illustrated by the red wave) near $0.072 serving as the primary downside target.
The decline in Dogecoin's price coincides with a shrinkage of DOGE supply controlled by the wealthiest investors. Interestingly, the supply managed by Dogecoin addresses holding between 100 million and 1 billion DOGE tokens (represented by the green wave) has dropped almost 1% in the past fortnight. Interestingly, the supply held by the subsequent cohort - those possessing over 1 billion DOGE (the black wave) - has surged by 0.5% over the same span.
Technically, for DOGE to regain momentum, it needs to surpass the upper resistance line of its prevailing dropping triangle setup. If this optimistic scenario transpires, the price could touch $0.10, its September 2022 resistance, by the conclusion of 2023. Conversely, the bears will aim to drag DOGE/USD down by 25% to $0.056 by year-end or even by 70% to $0.023 in Q1 of 2024 if the price falls below the triangle's lower baseline.
A dropping triangle shaped in a downtrend is usually deemed a bearish prolongation setup. The pattern concludes when the price slips below its lower baseline and plummets by a distance equivalent to the utmost gap between its upper and lower baseline. This article does not provide investment recommendations or guidance. Every investment and trading transaction entails risk; hence, readers need to undertake their research before making any decisions.
Published At
11/28/2023 4:06:39 PM
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