Dogecoin (DOGE) has been struggling under bearish pressure, registering a 20% decline in just seven days. At press time, the largest meme coin was trading at $0.264, with a market capitalization of $39 billion. Despite the downturn, volatility has eased, pushing DOGE into a consolidation phase.
Liquidation Cluster Could Drive DOGE Higher
A key technical factor that could influence DOGE’s price movement is a liquidation cluster hovering above the current level. Data from Dogecoin’s 24-hour liquidation heatmap highlights a significant cluster at $0.272.
If DOGE moves up to this level, short sellers could face forced liquidations, triggering buying pressure that may fuel a rally. Since short positions are closed through buying, this process could create additional momentum for an upward breakout.
Moreover, earlier in the week, a wave of long liquidations cleared out key liquidation zones below the price, reducing the risk of further downside. Even if DOGE fails to attract fresh buying momentum, this lower risk could keep it in consolidation rather than leading to another sell-off.
Positive Funding Rates Signal Bullish Sentiment
According to Coinglass data, Funding Rates have turned positive, indicating that long traders are paying short traders to maintain their positions. This suggests growing confidence among bulls. A sustained positive Funding Rate often hints at an upcoming uptrend, reinforcing the possibility of a bullish breakout.
Will DOGE Escape the Consolidation Zone?
Dogecoin’s hourly chart shows that it is currently consolidating within a narrow price range. At press time, DOGE was attempting a breakout past the midline of the consolidation channel, but low trading volume remains a hurdle.
To confirm a bullish breakout, DOGE needs to flip resistance at $0.272, coinciding with the short liquidation zone. The Relative Strength Index (RSI) has risen to 52, suggesting that buyers are slowly regaining control. The RSI’s positioning above the signal line further indicates short-term bullish momentum.
However, the constriction of Bollinger Bands suggests that volatility remains subdued. Until buying pressure increases significantly, DOGE may continue to trade sideways within the current range.
Data from Coinglass reveals that 77% of traders on Binance are holding long positions on DOGE, compared to just 22% in short positions. This indicates that market sentiment remains optimistic. If buyers step in with stronger demand, Dogecoin could finally break out from consolidation and aim for higher resistance levels.
Dogecoin’s price action suggests a crucial moment ahead. While bearish pressure has pushed DOGE into consolidation, the presence of a liquidation cluster at $0.272, positive Funding Rates, and strong trader sentiment could pave the way for an upward breakout. Investors should watch for a decisive move above resistance to confirm a trend reversal.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
