The price of Dogecoin (DOGE) is down today, mirroring trends elsewhere in the cryptocurrency market.
Why is Dogecoin price down today?
On November 28, the price of DOGE fell by more than 3.5% to $0.076, underperforming the cryptocurrency market, which fell by around 1.25% in the same period. The memecoin price drop is part of a broader correction that has seen a decline of almost 12.5% in over a week.
XRP/USD daily price chart. Source: TradingView
Let’s take a closer look at the most likely reasons behind Dogecoin’s latest pullback.
Bearish divergence
Dogecoin’s decline today precedes a period of increasing bearish divergence between its price and a key momentum indicator.
Notably, between October 6 and November 17, the DOGE price recovered and reached higher highs. But, in the same period, its daily Relative Strength Index (RSI) fell, forming lower highs.
DOGE/USD daily price chart. Source: TradingView
As a rule of technical analysis, a divergence between rising prices and falling RSI indicates weakness in the prevailing uptrend, leading traders to take profits at local price highs.
Growing Bitcoin Dominance
Dogecoin’s price drop today is part of the decline in the weight of the broader altcoin market against Bitcoin (BTC).
Notably, the Bitcoin Dominance Index, which measures the market share of the top cryptocurrency versus the combined weight of all altcoins, has increased by 0.83% in the last 24 hours. In simple words, traders have rotated their capital from altcoins to Bitcoin.
BTC daily performance chart.D. Source: TradingView
In contrast, Dogecoin’s market dominance versus the rest of the cryptocurrency market decreased by more than 1% on November 28.
Psychological resistance
Dogecoin’s price drop today appears to be the result of a bearish rejection by one of its strongest distribution areas.
Notably, DOGE price reversed after retesting its 0.236 Fib line near $0.081 as resistance. Since May 2023, its attempt to close above this price level has failed, as illustrated below.
DOGE/USD daily price chart. Source: TradingView
As a result, the probability of DOGE continuing its retracement move is high in December 2023, with its 50-day exponential moving average (50-day EMA; the red wave) near $0.072 acting as the main downside target.
DOGE whale sale
The Dogecoin price drop coincides with a reduction in the supply of DOGE in the hands of its richest investors.
In particular, the Dogecoin address-controlled supply with a balance of between 100 million and 1 billion DOGE tokens (the green wave) has fallen by almost 1% in the last two weeks. Interestingly, the supply of the next cohort (those holding over 1 billion DOGE (the black wave)) increased by 0.5% in the same period.
DOGE supplies cross-address holdings with an infinite token balance of 100 million. Source: Sentiment
The billion-plus DOGE balance cohort may include addresses associated with crypto exchanges and over-the-counter trading desks, indicating that the whales have transferred their Dogecoin to such platforms for the purpose of selling them.
Is the Dogecoin bull market over?
From a technical perspective, DOGE needs to break above the upper trendline of its predominant descending triangle setup. If this bullish scenario plays out, the price may reach $0.10, its September 2022 resistance, by the end of 2023.
DOGE/USD weekly price chart. Source: TradingView
The bears, however, will try to push DOGE/USD down 25% to $0.056 by the end of the year, and perhaps even 70% to $0.023 in the first quarter of 2024 if the price falls below the line. lower trend of the triangle.
Related: YOLO Director Invested $4 Million of Netflix Budget in Dogecoin and Earned $27 Million: Report
A descending triangle that forms in a downtrend is considered a bearish continuation setup. The pattern resolves when the price falls below its lower trend line and falls as much as the maximum distance between its upper and lower trend line.
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
