Can Dogecoin Price Rebound From $0.35 Due To $766M Short Liquidation?

• Dogecoin price has dropped by 20% in the past ten days.
• If DOGE recovers to $0.35, the $766.45 Million in short positions will be liquidated.
• Although there isn’t any volume support, the DOGE bull flag points to a potential reversal at range lows and a sell side deviation.

Dogecoin (DOGE) price has been struggling below the $0.42 mark since December. Dogecoin price has been rising by taking support on an ascending trendline.

An impending price reversal was indicated by increased trading activity on Dogecoin, which was characterized by a spike in net longs and slippage. Each local top was accompanied by a spike, which in turn caused sharp drops in price.

After the initial spike in net longs and slippage, the price of DOGE initially displayed resilience by trading sideways.

But as the spikes grew more noticeable, they were always followed by steep declines, supporting the trend that excessive buying zeal (FOMO) frequently results in unsupportable price levels.

Following the most recent local peak, when the price fell from about $0.36 to less than $0.32, the most recent data points show a steep decline.

This implied that traders who acquired DOGE positions during these spikes were probably doing so at a peak and then watching the value of their investments drop soon after. For possible sell-offs, the spikes acted as a warning.

DOGE may signal continued volatility with potential declines if it keeps exhibiting similar patterns of net long spikes and slippage followed by declines.

DOGE Price Analysis Based on Technical Chart

When writing, Dogecoin crypto was trading at $0.335 which has increased by 0.54% over the past 24 hours. The market capitalization was $49.35 Billion and the 24-hour trading volume was $2.71 Billion.

Based on the technical chart, the price has slipped below the 20-day EMA and has dropped to an ascending trendline.

If the DOGE price manages to defend the trendline, it could be a bullish signal. If the price forms any bullish candlestick pattern, bullish momentum can be anticipated.

Conversely, if the price dives below the trendline, buyers might panic. Here, panic selling can be observed which may witness a sharp fall. Once the price of DOGE sustains below the trendline, it would be difficult for buyers to bounce back.

Liquidation Risk of Extremely Leveraged Short Positions

An estimated $766.45 Million in short positions would be ready to liquidate if the price were to rebound to $0.35, according to the DOGE Liquidation Heatmap. This suggests a significant increase in buy pressure, which could push the price higher still.

This happened as the market’s volatility resembled a rollercoaster ride, with steep drops interspersed with quick recoveries.

The $0.35 concentrated liquidation points showed where most short positions could be squeezed, which would cause the price to rise quickly.

As short sellers scramble to cover their positions, the ensuing short squeeze could drive Dogecoin’s price even higher if it hits this level, accelerating the upward trend.

Dogecoin Price Forecast Amid Liquidation

Dogecoin’s recent price action suggests a precarious situation, marked by increased volatility and potential for further declines. The significant amount of short liquidations at the $0.35 mark highlights a critical resistance level that could spark a reversal if breached.

However, the lack of volume support and the presence of net long spikes indicate that traders should approach with caution.

If DOGE can maintain its position above the ascending trendline and form bullish patterns, there may be an opportunity for recovery. Conversely, a drop below this support could trigger panic selling and exacerbate downward momentum.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.