Key takeaways
What is the short-term outlook for Dogecoin?
Although there appeared to be some evidence of on-chain accumulation, it is likely not enough to prevent another 18% price drop.
Why is such a price drop expected?
Dogecoin’s OBV fell below the lows it set in August, a sign that selling volume flooded the spot market in October.
Dogecoin [DOGE] suffered a bearish setback in the last 24 hours when Bitcoin [BTC] It briefly fell to $106.3k, before bouncing further. At its lowest point, DOGE reached $0.176 on Thursday, June 30.
This was a 9.34% drop from the day’s high of $0.194. At the time of writing, Dogecoin was showing strong short-term bearish sentiment, down 3.55% on open interest in 24 hours. However, the bulls managed to defend the $0.175 demand zone. For now.
Importance of $0.178 and the warning sign for Dogecoin bulls
Bitcoin has been trading within a range since August. This range was between $124.5 thousand and $107.5 thousand. The brief dip below the range lows in recent hours suggested that there is a possibility of a bullish bounce, provided we see strong spot demand.
Source: DOGE/USDT on TradingView
Therefore, there is also a possibility of a Dogecoin bounce. However, it would largely depend on capital inflows into the market in the coming days. Recently, although the demand zone of $0.175-$0.185 has been defended, the selling pressure has also been high.
This was evidenced when OBV formed a new low, below the baseline it had established in August. In fact, the recent sales volume has been overwhelming. And it seemed like it may only be a matter of time before the bulls give in to the pressure.
If Dogecoin falls below $0.175, the next support level would be the $0.15 level. This has been the basis of the rising wedge pattern that began in June.
Daily active addresses have been falling in October. This hinted at a reduction in network activity and a drop in organic demand for Dogecoin. However, the average age of the coins saw an uptick in the last two weeks.
This could be a sign of on-chain accumulation, despite the spot selling seen on the price charts. The age consumed metric also saw some spikes recently, but nothing extreme.
Overall, while the aforementioned findings seemed encouraging, they are unlikely to be enough to reverse the selloff witnessed in recent weeks. Therefore, a bearish bias and a price drop to $0.15 can be anticipated.
