Dogecoin Drops 6.78% In A Week, Tests Key Support At $0.167

Dogecoin (DOGE) has faced significant downward pressure over the past week, with its price currently hovering around $0.1667. This represents a 3.33% decline over the past day and a more substantial 6.78% drop over the past week. The meme cryptocurrency is testing a critical support level, and analysts are closely monitoring its performance.

Crypto analyst Ali Martinez has highlighted that Dogecoin is currently testing a key support level around $0.167. If this support holds, Martinez suggests that DOGE could rebound toward $0.175 and potentially rally to $0.183. However, DOGE has struggled to maintain stability above this crucial level for the past three days, indicating bearish sentiment and low network activity.

Market sentiment indicators reflect a challenging environment for Dogecoin. The meme coin's Weighted Sentiment has remained negative over the past three days, signaling strong bearishness among market participants. This negative perception has led many traders and investors to adopt a cautious approach. Additionally, network activity for Dogecoin has seen a sharp decline, with the price DAA (Daily Active Addresses) divergence remaining negative over the past seven days. This suggests that the current price is not backed by actual demand.

With bearish sentiment dominating, many market players have been aggressively shorting the meme coin. The downward momentum appears to be strengthening, as evidenced by the declining RVGI (Relative Vigor Index), which has dropped to -0.12. If this downtrend continues, DOGE could fall further and find support around $0.161. For a reversal to occur, buyers would need to displace sellers who are currently attempting to control the market.

Despite these bearish signals, there are positive developments that could trigger a rebound. Dogecoin has reclaimed the $0.17 mark after a 6% rally overnight, following the announcement that China is open to negotiating a trade deal with the U.S. in Switzerland this weekend. From a technical perspective, DOGE is on the verge of breaking out from a falling wedge pattern, which has formed over the past two weeks as the price trend contracts. A falling wedge breakout could potentially push DOGE to the $0.20 psychological mark.

The derivatives market is also showing signs of increased interest in Dogecoin. The DOGE open interest has increased, reflecting increased trader interest. As bulls gradually dominate the derivatives field, the short liquidation risk grows. Recent funding developments have also sparked optimism. DogeOS has secured $6.9 million in funding, which has helped boost sentiment around the meme coin. Historically, Dogecoin price trends have shown short-term spikes aligning with sentiment surges, suggesting this recent funding could help push DOGE toward the $0.20 mark.

For the positive price targets predicted by analysts to materialize, Dogecoin may need external catalysts such as favorable macroeconomic reports or positive developments from the upcoming FOMC meeting. The latest price data shows Dogecoin trading at $0.17337303, reflecting the recent 4% bounce as it attempts to reclaim important price levels.