Dogecoin (DOGE) is in an interesting bearish market situation right now. It is developing its second multi-month descending triangle pattern since early December. This pattern of aversion has continued even as the broader market has downtrended, causing many investors to fear that prices may continue to fall. Despite the weakness shown in the derivatives market, spot investors have mostly continued their buy-the-dip approach.
The price of DOGE repeatedly encounters rejection around the descending triangle’s resistance. On Tuesday, DOGE was unable to record any positive price movement, dropping 3% as intensified selling pressure from the futures market weighed on DOGE. The crypto’s funding rate is about to go negative for the first time in months. This transition is a sign that bears are increasingly feeling pessimistic in the derivatives market.
Technical Analysis and Key Support Levels
DOGE is now printing its second multi-month descending triangle since DOGE started its downtrend in early December. If DOGE falls below the $0.1428 support level, it could see support near $0.0906. This will largely depend, of course, on buyers moving soon. The $0.1428 level is an important support for DOGE to maintain, as failing to do so could catalyze a renewed major downtrend.
DOGE’s Relative Strength Index (RSI) is currently below its neutral level of 50, indicative of bearish momentum. The Stochastic Oscillator is above the midpoint but pointing down, indicating a small build-up of bearish momentum. These markers are a sign that bearish momentum is slowly building.
A strong breakout above the descending triangle’s resistance would invalid this bearish thesis. Such a breakout would likely push DOGE up to $0.287, providing nearly 120% upside for investors. DOGE's price consistently sees a rejection near the triangle's resistance, adding further confirmation to the pattern.
Spot Market Activity and Investor Sentiment
Despite increasingly bearish signals from the derivatives market, DOGE has bounced back strongly. This marks the 203rd day of net outflows on exchanges since the crypto market began its descent in late January. This reflects prevailing bullish spot demand from investors with the ability to ‘spot’ buy—suggesting they may be making use of a buy-the-dip tactic. DOGE has only seen 10 days of net inflows on exchanges over the past three months. This figure puts into perspective the degree of spot buying demand.
In fact, DOGE’s open interest has been mostly sideways since early February. All of this means less appetite from the most leveraged traders, which is often a leading indicator of caution coming to the market.
DOGE’s derivatives market shows signs of weakness, though spot investors persist with their multi-month buy-the-dip strategy. This divergence in behavior between the spot and derivatives markets gives a bullish and bearish outlook for DOGE.
Market Outlook and Potential Scenarios
DOGE’s market outlook remains tenuous, teetering on the edge of bearish technicals and continued spot buying demand. Dogecoin’s RSI and Stoch are raging above their neutral levels at the moment. Nonetheless, they are turning downward, indicating a rollback trend and exposing a hidden weakness in bullish momentum. DOGE’s fierce price action must be closely analyzed to see where it goes from here.
If DOGE loses the $0.1428 support, a quicker descend towards $0.0906 will be anticipated. This ultimate case would clearly be led by more aggressive selling pressure combined with a shift in spot investor sentiment possibly to more of a seller.
If the price breaks above the $27,875 resistance of the descending triangle, it will invalidate the bearish thesis. This development would likely fuel DOGE’s advancement towards $0.287. Such a bullish scenario would need extremely strong buying pressure and improved market sentiment.
