According to Cointelegraph: Dogwifhat (WIF), a prominent memecoin on the Solana blockchain, is facing a significant downturn, with its price plummeting by approximately 30% since its local high on August 9. The token, which once showed impressive gains, is now at risk of further declines due to a classic bearish reversal pattern.

WIF's Decline Mirrors Other Memecoins

WIF's recent price drop is in line with broader declines in the memecoin market, affecting other major tokens like Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE). For example, DOGE has fallen by around 10% over the past nine days. Among these, WIF has suffered more severe losses, with a 30-day decline of approximately 42%, outpacing DOGE's 15% drop and SHIB's 23.5% decrease.

Despite its recent struggles, WIF had an extraordinary year-to-date performance, with returns of about 708%. However, such significant gains likely prompted early investors to take profits, resulting in increased selling pressure.

Impact of Long Liquidations

WIF's 30% correction from its August 9 peak coincides with a surge in long liquidations in the WIF futures market. Data from Coinglass shows that there were $6.932 million in long liquidations compared to $3.16 million in short liquidations over the past nine days.

This suggests that many traders were overly optimistic about WIF's continued price increase, leading them to open leveraged long positions. As WIF's price started to decline, these traders faced margin calls, forcing them to liquidate their positions, which further exacerbated the selling pressure.

Potential for Further Declines: The Head-and-Shoulders Pattern

WIF's technical outlook is also bearish, with the formation of a head-and-shoulders (H&S) pattern, a classic reversal signal. This pattern consists of three peaks, with the middle peak (the head) being the highest and the other two (the shoulders) being lower, all forming above a common support level known as the neckline.

As of August 17, WIF was attempting to break below its H&S neckline at around $1.46. If this pattern plays out, WIF could see its price drop to around $0.725 by September, representing a further decline of approximately 48% from its current levels.

However, if WIF manages to reclaim the neckline as support and closes above its accumulation area between $1.48 and $1.69, it could invalidate the bearish H&S setup. In that case, WIF might target its 50-day and 200-day exponential moving averages as immediate upside levels.

Dogwifhat (WIF) is currently experiencing significant downward pressure, both from market dynamics and technical factors. The formation of a bearish head-and-shoulders pattern suggests that further declines may be on the horizon unless WIF can reclaim key support levels. Investors should monitor these developments closely, as the next moves could determine whether WIF stabilizes or continues its descent.