Can Dogecoin Bounce Back from a Critical Support Level?

Can Dogecoin Bounce Back from a Critical Support Level?

Dogecoin (DOGE) has fallen to a crucial support level, raising questions about its potential for recovery. After weeks of decline, the memecoin has reached critical technical zones. Will DOGE witness a positive movement from here or face a further correction?

Technical Analysis

Dogecoin is currently attempting to hold onto the support provided by the 200-day moving average (MA) at $0.23045. This level has historically marked significant recovery points for DOGE.

If this support breaks, Dogecoin may experience a steeper decline. Fibonacci retracement levels indicate that DOGE has fallen below the 0.618 Fibonacci level at $0.39485, a signal typically associated with trend continuation.

DOGE's next key support is at $0.23045, a level that could provide a safety net for traders. For a bullish scenario, DOGE must maintain its position above this level and regain the 50-day moving average at $0.32976.

Technical Indicators and Network Activity

Dogecoin's Relative Strength Index (RSI) currently stands at 33.32, indicating that DOGE is approaching oversold territory. Usually, an RSI below 30 signals a potential price recovery. However, a weak market sentiment could delay this rebound.

Network activity has also declined significantly. Active wallet addresses have dropped from 9.8 million in December to 1.32 million currently, suggesting reduced investor interest and network activity. Nevertheless, past similar situations have often triggered recoveries as long-term investors accumulate DOGE at lower prices.

Conclusion

Traders should observe whether DOGE can sustain its position at $0.23045. If this level fails to hold, the next critical support lies around $0.20. It is crucial to consider fundamental technical indicators and network activity before making short-term decisions.