Dogecoin (DOGE) Price Analysis: Double Bottom Pattern Promises Rally, But Will It Hold?

Dogecoin [DOGE] formed a double bottom pattern on the price chart, one that promised a strong rally was brewing. However, the technical indicators and the liquidation levels showed that a short-term range formation was possible.

Dogecoin [DOGE] dropped to multi-month lows in December, setting the stage for a recovery. However, technical indicators and liquidation levels hinted at a possible short-term range formation.

Which way will the leading memecoin run in?

Dogecoin defends local demand zone

A set of Fibonacci retracement and extension levels were plotted based on the rally made in November. The $0.143-level, the high from July, was used as it had been flipped to support. Below the local demand zone at $0.36-$0.38, the $0.272 and $0.215 levels were highlighted as key supports.

As things stand, it may be unlikely that DOGE would fall to these levels anytime soon. The RSI fell to 53 to reflect muted bullish momentum on the daily timeframe. And yet, it stayed above neutral 50 to show that buyers still had the upper hand.

The OBV was above the local highs that DOGE formed on its way up in November. If the OBV falls below the marked levels, a bearish bias can be adopted. At the time of writing, the evidence pointed towards relatively weak selling pressure.

Liquidation heatmap showed momentum is likely to remain neutral

The 3-month look-back period revealed a cluster of liquidation levels at $0.485 and $0.355. The latter coincided with the local demand zone and could be revisited in the coming days or weeks.

Further south, a band of liquidity was building up at $0.34. These liquidity pools can attract prices south.

Zooming in on the liquidation heatmap, we can see that the $0.395 and $0.425 levels have noticeably high liquidity. Given the lack of momentum on the daily chart and the stalemate between buyers and sellers, it is possible that Dogecoin forms a short-term range.

A move beyond $0.43 in the coming days would be an early clue that the $0.5-level would be retested soon. Meanwhile, a fall below $0.395 and $0.355 could set DOGE up for a deep, prolonged correction.