After the convergence of the 20-day EMA and the 100-day EMA, Dogecoin formed a sell signal, indicating that the short-term trend is weakening.
After two large addresses transferred $56 million worth of DOGE to Robinhood, the whales also profited from it.
From its four-hour chart, Dogecoin faces more downward pressure. Its trading price is below the 20-day, 50-day, and 100-day exponential moving averages (EMA), indicating a bearish short-term trend.
The key support level is at the 200-day EMA, which is $0.34. Once Dogecoin falls below this price, the long-term trend may also turn unfavorable.
After the intersection of the 20-day EMA and the 100-day EMA, a sell signal has been issued in the lower time frame. If the 20-day EMA dips to $0.41 and breaks below the long-term moving average, this sell signal will be confirmed, leading to a price drop.
The Chaikin Money Flow (CMF) is at a negative level of -0.02, which also indicates that sellers have been actively participating in the market.
If Dogecoin's downward trend continues to intensify, given that selling power dominates the market, its price may slide to the 1.618 Fibonacci level, which is $0.29.
In contrast, the key resistance level is at the $0.42 Fibonacci level, which is also where the 50-day exponential moving average (EMA) lies. If the downward trend can attract buyers, Dogecoin may break through this resistance level and resume an upward trend.
Are Dogecoin whales making a profit?
On December 10, two whale addresses transferred 146 million DOGE tokens to the Robinhood exchange, worth over $56.42 million. This transfer may indicate a selling intention.
Large holders (whales) in the Dogecoin market rapidly increased their holdings of this cryptocurrency last month, significantly impacting its short-term price direction.
If these whales start selling at the prices they initially bought, Dogecoin is likely to give back all of its recent gains.
Speculative interest is waning
Due to the market's heightened speculative enthusiasm for Dogecoin, its open interest (OI) surged to double in less than a month, strongly breaking through on December 9, reaching a historic peak of $4.45 billion.
However, in the last two days, the situation turned sharply, with OI shrinking by over $1.5 billion. As of the time of writing, it has fallen back to $2.95 billion.
The reduction in open interest (OI) means traders are gradually closing positions on Dogecoin. The decline in market participation is also reflected in the derivatives trading volume, which, according to Coinglass data, has significantly decreased by 34% to $14.23 billion as of the time of writing.
This fluctuation in sentiment in the derivatives market may lead to price volatility stabilizing and prompt Dogecoin to enter a consolidation phase.
Market sentiment is bearish
These bearish signals have suppressed market sentiment around Dogecoin. Both the general public and savvy investors have a bearish sentiment towards Dogecoin, indicating traders expect prices to drop further.
If market sentiment remains low, it may suppress buying activity, leading to further declines in DOGE.