DOGE Bears Tighten Grip: Price Correction Looms as Technical Indicators Flash Warning

Technical analysis indicates a possible downward trend for Dogecoin (DOGE), with the formation of a death cross on the EMA and a flatlined EFI suggesting a lack of buying activity. The 1.618 Fibonacci level at $0.12 serves as potential support, but a break below could lead to a further decline to $0.10. Despite the high supply of profitable holders, the 90-day MCA suggests selling pressure, potentially resulting in a price slide below $0.12.

Dogecoin Faces Bearish Pressure Amidst Technical Indicators Suggesting Steep Correction

Introduction

Dogecoin [DOGE], once a prominent cryptocurrency known for its meme-inspired mascot, has encountered a series of challenges that have cast doubt over its future trajectory. Technical indicators currently point to a bearish outlook for the coin, raising concerns among investors and analysts alike.

Exponential Moving Average (EMA) Signals a Bearish Cross

An examination of Dogecoin's Exponential Moving Average (EMA) reveals a significant bearish cross that occurred on April 24th. The 50 EMA (yellow line) crossed over the 20 EMA (yellow line), indicating a shift in momentum towards a downtrend. Since then, the EMA positions have remained unchanged, further emphasizing the bearish sentiment.

Death Cross Signals Potential Correction

This EMA cross is commonly referred to as a "death cross" and is typically interpreted as a warning of an imminent steep correction in price. The Elder Force Index (EFI), which measures buying and selling activity, corroborates this potential decline. At the time of writing, the EFI on DOGE's 4-hour chart exhibits a flatline pattern, indicating a significant lack of trader activity and interest in the coin.

Fibonacci Indicator Suggests Support at $0.12

The Fibonacci indicator, a technical analysis tool used to identify potential support and resistance levels, further suggests a possible price crash for Dogecoin. The 1.618 Fib level, also known as the golden ratio, is currently positioned at $0.12. This suggests that Dogecoin's immediate support could lie around this level.

Failure to Defend Support Could Lead to Further Losses

If Dogecoin fails to maintain its support at $0.12, it could face further depreciation towards $0.10. However, it is worth noting that despite the coin's recent decline, on-chain data indicates that a substantial portion of the total supply (76.66%) is still profitable.

90-Day Performance and Mean Coin Age (MCA)

Dogecoin's 90-day performance, which has seen an 83.65% price increase, may be contributing to the high supply of profitable coins. However, in such scenarios, there is a risk that investors may decide to book profits, especially during periods of slowing bullish momentum.

An analysis of the coin's Mean Coin Age (MCA) metric reveals a recent spike, indicating that many older coins have been moved. This typically suggests selling pressure and could coincide with the liquidation of assets.

Conclusion

The current technical indicators for Dogecoin paint a concerning picture, with the death cross, flatline EFI, and Fibonacci indicator all suggesting a potential steep correction. While on-chain data shows a significant portion of the supply is still profitable, the high coin age and potential for profit-taking could further depress the price. Investors are advised to exercise caution and monitor the situation closely, as Dogecoin faces significant headwinds in the short term.