Dogecoin Price Approaches $0.21 Panic Threshold; Decline May Trigger Significant Crash

Dogecoin is displaying increased selling pressure after retracting much of its bullish momentum observed in late April and early May. Technical observations of Dogecoin’s pricing indicate that the cryptocurrency is precariously positioned right above a crucial support threshold putting it on the brink of a downtrend. 

Analyst RLinda highlighted this crucial level at $0.214 on the TradingView platform, identifying it as a retest of the panic zone. 

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Panic Zone Under Retest as Dogecoin Faces Correction

RLinda noted that Dogecoin’s distribution phase from May 9 to 11 concluded in the $0.2600 zone, signaling the end of its recent bullish surge. During this timeframe, Dogecoin lost the potential it had built up in April and early May.

Following this, the price has been on a consistent decline, entering what the analyst refers to as the correction phase. This has led to the meme coin testing the $0.214 level, the current panic zone. A confirmed breach below this level, especially beneath the 0.2135 mark, would potentially liquidate long positions and further escalate selling pressure, leading to a possible uncontrolled price drop.

Notably, this corrective action has manifested as lower highs, forming a triangle pattern observable on the 2-hour chart. RLinda cautioned that if the base of the triangle is breached, it could exacerbate bearish sentiment. This situation could facilitate downward targets nearing $0.20 and even $0.19.

Key Resistance and Support Levels for Dogecoin

Immediate resistance is positioned at $0.222 and $0.2307, which are vital areas that Dogecoin needs to reclaim to reverse the current bearish trend. A movement beyond these levels, particularly with sustained price action above $0.23, could invalidate the bearish pattern and potentially reinstate bullish enthusiasm. However, RLinda advised that this scenario should only be considered after clear confirmation, as the ongoing momentum still favors sellers.

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Conversely, support levels at $0.2145 and $0.2135 currently act as the last barriers against further declines. A close below $0.2135 would signify the continuation of the downtrend and lead Dogecoin’s price into a lower consolidation zone, with diminished immediate support until $0.20126 and $0.19298.

At present, Dogecoin is trading at $0.22, marking a 1.72% increase over the last 24 hours. This minor recovery suggests early signs of strength and might already be challenging the bearish outlook. While this slight uptick alone does not confirm a bullish reversal, it indicates that buyers are attempting to regain control. If this momentum can be maintained into the upcoming week, it could gradually create opportunities for a more sustained ascent for Dogecoin in the week ahead.

Featured image from Mashable, chart from TradingView