Dogecoin Down 2%. Is This a Bear Trap or the Real Deal?

Dogecoin dropped 2% on Monday, retracing to a low of $0.096. It joined the rest of the crypto market, as most assets saw a long squeeze.

The memecoin shows signs of recovery at the time of writing. With the buyback underway, it remains to be seen whether the bulls can sustain the fresh upward momentum.

Nonetheless, DOGE surged above $0.10 for the first time in almost two weeks, but it later lost momentum. It dropped and stayed in a range above $0.097 for an extended period, per a shorter-term chart. The recent drop is more surprising as it appears there was no trigger.

The first round of declines happened shortly after U.S. markets opened. Over the weekend, talks to end the conflict in the Middle East were underway, and the market reacted in its opening hours.

The second round happened after considerable normalcy. This time, the trigger was oil prices. They surged for a few hours due to issues between Iran and the US. The crypto market succumbed to both waves, resulting in valuations dropping below $2.54 trillion.

Nonetheless, derivatives provide another explanation as to why prices declined. The chart above shows that funding has been positive for some time. It created a room for several long squeezes. Before the latest wave of downturns, rates were positive for three days and remained so on Monday.

Aside from derivatives, the cumulative volume delta has been declining amid rising prices. It means while prices rose, there was considerable selling pressure. However, the trend changed a few days ago, and CVD is rising. Given that prices declined during the indicated decline, the reversal, coupled with positive funding, may indicate further price downtrend before the metric and prices correlate.

Is the Dogecoin Decline the Real Deal?

The general consensus across the crypto market is that the uptrend is currently overdue and corrections are imminent. The recent decline may indicate growing selling pressure that will increase in the coming days.

The moving average convergence-divergence agrees that it may be the start of a massive downturn. Its 12- and 26-EMA lines are currently trending closely together, signaling an impending negative crossover. Additionally, Dogecoin recently faced rejection after testing bollinger’s upper band.

While these metrics and prices suggest that the downtrend has started, they are not definitive. For example, the altcoin has traded between the upper and middle bands, with a few breakouts. It recently tested the upper band, but was rejected. It will retrace to the SMA over the coming days in complete the trend.

Nonetheless, the bollinger band offers an insight into what will confirm the massive downtrend. Dogecoin must decisively break the middle band. If that happens, it will seal further decline to the lower band.

Interestingly, there is a notable volume slightly below the SMA. If DOGE flips this zone, a drop to $0.090 is almost inevitable.

In the meantime, Dogecoin may surge even higher in the coming days. Previous price movement shows that the selling congestion at $0.10 will soften, and a surge to $0.102 may follow. Backing this assertion is the growing demand concentration at $0.0965. The bulls may stage rallies at this mark this week.

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