Dogecoin, a popular dog-themed meme coin, has defied the broader cryptocurrency market downturn today, with its price rising by 0.39 percent and trading at $0.1044 at the time of writing. Despite this slight uptick, it’s essential to understand that this altcoin’s path hasn’t been straightforward.
Earlier this week, on Monday, the cryptocurrency retested a critical resistance level around the $0.115 level, failing to sustain its momentum and experiencing a slight pullback of 10%. Following this pullback, the token has breached below the 50 SMA at $0.1057, which hints at a potential downside pressure in the short term.
However, upon this pullback, the DOGE token has witnessed stability around a support trendline drawn from the recent lows, which could act as a crucial level for buyers to defend to prevent a more significant decline.
This indicates that while there may be short-term downside pressure, there is still potential for a rebound if key support levels hold. In fact, the cryptocurrency’s ability to hold above the $0.10 mark will be a critical test of its strength and resilience in the face of market volatility.
On-Chain Data Hints at Negative Price Action
Besides the adverse price action from Dogecoin’s technical data, on-chain metrics also present a bearish outlook for the token. According to data from IntoTheBlock, the token’s transaction volume has been steadily declining, highlighting a lack of interest and activity among investors.
Just on October 7, the token peaked at 553.99k transactions at a cost of $0.11 but has since plummeted to just 73.45k transactions at $0.108. Additionally, the number of large transactions has decreased from a weekly high of 1.32k to 1.1k, pointing toward a possible downfall in institutional participation in the cryptocurrency.
These combined factors indicate that the ongoing negative price action may continue in the near term, potentially breaching key support levels unless market sentiment shifts.
Can DOGE Hold Above $0.10?
From a technical perspective, the DOGE token is anticipated to exhibit further selling pressure as it struggles to maintain support above the $0.10 level. For instance, the RSI index presently shows bearish dominance, pointing to the downside. Positioned at 45.03, the indicator suggests ample space for further downward movement before reaching oversold conditions.
Such a scenario could push Dogecoin to break below the $0.10 support level and find a new lower support level around $0.092. If this area also falters, the token is anticipated to retest September’s low around the $0.088 price point before attempting another bullish reversal. However, if market sentiment shifts and buyers emerge to defend the $0.10 support level, the cryptocurrency could rebound toward the resistance at $0.115.
Moreover, a successful break above this critical barrier could indicate a reversal of the current downtrend, opening the door for a retest of higher resistance levels around $0.126. This level aligns with the 78.6 Fibonacci retracement, suggesting bullish momentum could extend beyond that point.
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