Dogecoin's price has been on a downward spiral, dropping 16% over the past six days. Investors are now questioning whether this downtrend will continue or if it's an opportune moment to buy DOGE at a lower price. As of now, Dogecoin shows no signs of stopping its decline, which started on July 27.
Dogecoin Price Performance in August
The recent drop in Dogecoin’s price has persisted, with the cryptocurrency losing nearly 16% of its market value in just six days. This continued descent might present long-term investors with a good opportunity to buy the dip. Historical data suggests that Dogecoin tends to show weak performance in the third quarter. Over the past decade, Q3 has typically seen an average price performance of 1.55% or close to zero, with a median performance of –7.14%.
Focusing on August, Dogecoin's average return has been 0.28%, with a median performance of -5.23%. This supports the “buy the dips” strategy, especially when considering on-chain data. For instance, a buy signal that appeared for DOGE in early July remains valid, predicting a high probability of reversal. Santiment’s 365-day Market Value to Realized Value (MVRV) metric dipped to -21% in the first week of July, indicating that investors who bought DOGE in the past year are experiencing an average loss of 21%.
Historically, an MVRV value between -15% and -30% has been a good accumulation zone, often leading to price reversals and substantial rallies. If this trend continues, the July 5 swing low of $0.091 could act as a bottom, potentially leading to a recovery rally.
DOGE Price Ready to Reverse Downtrend
From a technical standpoint, Dogecoin's ongoing downtrend might end around the $0.107 to $0.113 support zone. If long-term investors or sidelined buyers start accumulating DOGE here, the price could experience a volatile uptrend.
In the event of a reversal, Dogecoin will face its first key resistance level at $0.128, representing a 14% rally from $0.113. Beyond this point, DOGE could revisit the $0.148 hurdle, which served as critical support between March and May 2024. If this barrier is flipped into a support floor, it could propel DOGE to retest the $0.175 to $0.181 resistance zone. This scenario would amount to a 55% gain from $0.113, likely forming a top at that level.
On the contrary, if Dogecoin breaks down below the $0.107 to $0.113 support zone, it will invalidate the bullish outlook and potentially lead to a 15% crash, bringing the price down to the July 5 swing low of $0.0913.
In summary, while Dogecoin’s price is currently in a free fall, key support zones and historical patterns suggest the possibility of a reversal. Investors should closely monitor these levels and market signals to make informed decisions.
Notice:
,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“
