Dogecoin (DOGE) price is up 8% today at $0.2486 but struggles to sustain dominance over the $0.25 psychological level. Amid such struggle, the Dogecoin technical signals warn of a quick pullback as the price action hints at a potential bearish pattern. Is this the end of the 50% rally in Dogecoin or a minor correction before the prevailing trend resumes?
Dogecoin Price Warns of Double Top Reversal
Dogecoin price jumped 9.51% in the last 20 hours, creating three consecutive bullish candles known as the triple white soldier pattern. The DOGE price rally accounts for 50% starting from the May 6 bottom at $0.1653.
As Dogecoin forms a peak at $0.2505, the meme coin price trend takes a sideways shift with a pullback $0.2245 on May 11. The recent bounce back in DOGE now challenges the short-term resistance while warning the possibility of a second peak. In such a case, a double top pattern will be formed in the DOGE price chart with a neckline at the $0.2245 support level.
If Dogecoin pullback breaks under $0.2245, a conclusive closing price below the support could signal a strong, steep correction. The price target of this bearish pattern is calculated by adding the distance between neckline and top to the breakout level. This warns of a 10% drop to the next psychological support level of $0.20.
As Dogecoin struggles to surpass the previous peak at $0.2505, the Relative Strength Index (RSI) drops from the overbought zone, suggesting a declining trend momentum. This highlights a bearish divergence between RSI and Dogecoin, considered a highly bearish signal when paired with a double top. Furthermore, the MACD and signal lines merge after a bull run, suggesting a fall in trend momentum. Hence, the technical indicators give a bearish Dogecoin price prediction, warning of a short-term pullback.
Conversely, a 4-hour candle closing above the $0.2505 level will nullify the bearish pattern. However, the declining momentum is likely to trigger a pullback ahead.
Bearish Pattern Warns $100 Million in Liquidations
Amid the possibility of a steep correction, Coinglass data shows liquidation risks rising to $100 million if DOGE price hits $0.2278. This warns of a major wipe of bullish Dogecoin traders in the market.
Additionally, the short liquidations are at $3.97 million and the long liquidations rise to $7.64 million, almost double in the last 12 hours. This warns of a rising bearish dominance and a potential wipeout of additional long DOGE traders.
With a potentially bearish pattern in the making, Dogecoin could witness a minor pullback as suggested by technical indicators. However, this may not result in a $100 million in long liquidation due to early closure of long positions from traders.
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