Dogecoin (DOGE), the world’s most famous meme coin, has once again reminded traders of crypto’s ruthless volatility. A sharp 30% crash has rattled leveraged positions and shaken out weak hands, but analysts suggest the sell-off may pave the way for a new rally.
What Triggered Dogecoin’s Crash?
The latest downturn began after excessive leverage built up in the market. On September 19th, traders piled into overextended longs, with many betting on quick gains around the $0.31 level. That optimism proved costly as Dogecoin plunged to $0.24, triggering a wave of liquidations.
Market makers took advantage of the heavily leveraged positioning, pushing the price lower to hunt liquidity. Stop-losses and margin calls created a chain reaction of forced selling, accelerating the decline.
This “flush-out” reset market positioning by removing excess leverage. Such moves, while painful in the short term, often create cleaner conditions for a rebound once the dust settles.
The Technical Picture
From a technical standpoint, Dogecoin’s charts are showing mixed signals.
- Support Zone: DOGE found temporary support at $0.24. Holding above this level is critical for any near-term recovery.
- Resistance Levels: A bounce could see the token retest the $0.28–$0.30 zone. Beyond that, the key resistance to break remains $0.307, aligning with the 0.5 Fibonacci retracement.
- Indicators: On the weekly chart, momentum still leans positive. The Relative Strength Index (RSI) is above 50, while the Moving Average Convergence Divergence (MACD) remains in bullish territory. However, the daily chart paints a more bearish outlook, with RSI slipping below 50 and MACD crossing negative.
These conflicting signals suggest uncertainty. While the long-term structure points to continued upside, the short-term trend is under pressure.
Why the Daily Structure Looks Bearish
The daily chart confirms that Dogecoin is trading within an ascending wedge, a pattern often considered bearish. The recent decline has completed a five-wave upward sequence inside the wedge, supported by the presence of a symmetrical triangle in wave four.
This count implies that DOGE may be nearing a breakdown from the wedge. If this happens, the next support could lie between $0.197 and $0.218, aligning with the 0.5 to 0.618 Fibonacci retracement levels.
For now, traders should be cautious: a failure to hold above $0.24 increases the risk of a deeper slide towards $0.20.
Long-Term Outlook Still Promising
Despite the short-term bearish signals, analysts argue that the bigger picture for Dogecoin remains intact. Since October 2023, the token has been rising along an ascending support trendline, repeatedly bouncing off it. This suggests that the longer-term structure is still bullish.
According to Elliott Wave analysis, the recent slump could simply represent a corrective wave within a larger five-wave rally. If accurate, Dogecoin may be in wave two of a new upward cycle that could eventually lift the price toward $1 in the coming phases.
In other words, while short-term traders face turbulence, long-term holders may view the pullback as a healthy reset.
What Traders Should Watch
Going forward, the $0.24 level will be the immediate battleground. Holding it could trigger a rebound toward $0.30, while a breakdown risks opening the door to $0.20. Longer-term, if DOGE maintains its broader uptrend, the bullish thesis of a push toward $1 remains on the table.
For now, Dogecoin is caught between short-term bearish momentum and a long-term bullish structure. As always with DOGE, volatility is the only certainty, but this reset could lay the groundwork for the meme coin’s next big comeback.
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