Dogecoin (DOGE) is at risk of a 25% price decline as technical analysis reveals a classic rising wedge pattern. This bearish formation on the 1-day chart suggests a potential downturn, posing a threat to DOGE’s current uptrend. Despite a recent 1.38% increase, DOGE is currently trading at $0.157390, with technical indicators indicating possible challenges ahead.
The daily chart of Dogecoin (DOGE/USD) on TradingView shows a significant technical pattern that could have a significant impact on its price trajectory. The most notable feature is the classic rising wedge formation, a bearish reversal pattern that has been forming since mid-April.
As Dogecoin’s price fluctuates within the rising wedge, trading activity decreases. This drop in volume suggests a weakening of the current upward momentum, aligning with the bearish nature of the rising wedge. The Relative Strength Index (RSI), which is hovering around 50, indicates a neutral market sentiment. It is important to monitor the RSI closely, as significant shifts above 70 (overbought) or below 30 (oversold) could signal a potential breakout from the wedge pattern.
In terms of key moving averages, DOGE is currently trading above its 50-day EMA ($0.1576), 100-day EMA ($0.1494), and 200-day EMA ($0.1306). This positioning above these major EMAs suggests that DOGE is in an overall uptrend. However, the rising wedge pattern suggests that this uptrend may be reaching its limit. A breakdown below these EMAs, especially the 200-day EMA, which is often a long-term trend indicator, would confirm a bearish shift.
The chart also indicates a potential downside target around $0.1133 if DOGE breaks below the support line of the wedge. This level represents a significant 25% drop from the current price of $0.1590. Such a move would not only confirm the bearish nature of the rising wedge but also likely shake out many short-term investors who bought during the recent uptrend.
While the technical analysis presents a gloomy outlook, on-chain metrics provide a more nuanced perspective. An impressive 83% of Dogecoin holders are currently in profit, indicating strong investor confidence. However, the high concentration of large holders (63%) raises concerns about centralization. This suggests that whales have a significant influence on DOGE’s price movements, potentially leading to increased volatility.
Dogecoin’s price correlation with Bitcoin stands at 0.87, indicating that DOGE closely follows the trends of the market leader. This high correlation suggests that a downturn in Bitcoin could drag Dogecoin down as well. Interestingly, 67% of DOGE holders have held their tokens for over a year, reflecting their faith in the project and potentially mitigating any price drops.
However, transaction demographics reveal a nearly equal split between the East (52%) and the West (48%). This balanced distribution suggests that Dogecoin’s appeal transcends geographical boundaries, making it a truly global phenomenon. In the past week, there have been significant large-scale transactions, with $1.97 billion in transfers exceeding $100,000, indicating active whale activity.
Exchange flows show more tokens leaving than entering. Over the past seven days, $204.77 million worth of DOGE has left exchanges, while only $183.05 million has entered. This net outflow suggests that investors are holding onto their tokens rather than actively trading, which could be a potentially bullish sign.
In conclusion, the rising wedge pattern on the Dogecoin price chart indicates a possible 25% crash, with a breakdown below the support trendline potentially leading to a drop to $0.1133. However, on-chain data presents a mixed picture, with high holder profitability and long-term commitment contrasting with centralization risks. As June progresses, it will be crucial to monitor for a decisive breakout to determine Dogecoin’s next move.