Dogecoin (DOGE) is at $0.17, witnessing an intraday pullback of nearly 1%. However, the meme coin prepares for a bounceback with a falling wedge pattern, increasing the possibility of shaking out short-sided traders. Holding its ground near the $0.17 mark, Dogecoin prepares for a high-momentum move.
With bullish traders eyeing the Dogecoin price to hit $0.20, the key question remains: will this recovery rally liquidate nearly 1% worth of $1.65B DOGE open interest?
Dogecoin Price Analysis Hints at a 14% Falling Wedge Breakout Rally
The Dogecoin price action reflects a declining trend in motion in the 4-hour timeframe. Since April 23, the swing lows formed in Dogecoin connect to form a support trendline.
However, the bullish failure to create new swing highs has led to an overhead resistance trendline. The converging trendlines gave rise to a falling-wedge pattern, hindering the current DOGE price trend.
At present, the Dogecoin price tests the lower boundary line of the falling wedge pattern with a lower price rejection. This hints at the possibility of a new upswing within the pattern.
The MACD and signal lines support the upside chances as the average lines prepare for a positive crossover. Furthermore, Dogecoin is preparing to take off as it takes lower price rejection from the 200 simple moving average line.
The prevailing correction within the falling wedge pattern has led to the breakdown of the 50 and 100 SMA lines. This increases the possibility of a negative crossover between the average lines, potentially triggering a sell signal.
Based on the Fibonacci levels, a potential breakdown will likely result in a retest of the 38.20% Fibonacci level at $0.1560. However, a bullish comeback in Dogecoin, surpassing the overhead trendline, will likely pump prices by more than 14% to reach the $0.20 psychological mark.
Derivatives Data Warns of a Short Squeeze
As a falling wedge pattern holds Dogecoin, the sentiments in the derivatives market are gradually turning positive. As per Coinglass data, long positions have surged to 51.83% in Dogecoin derivatives in the past 4 hours.
This has marginally turned the long-to-short ratio bullish at 1.076. As the long positions continue to surge, the Dogecoin volume-weighted funding rate is on the verge of flipping positive.
After momentarily dipping into negative territory, the Dogecoin funding rate is now at 0%. With the growing bullish confidence in the derivative market, the funding rate is likely to flip positive, reflecting bulls willing to pay a premium to hold long positions.
Furthermore, the Dogecoin exchange liquidation map by Coinglass reflects high risk for short position holders. If the Dogecoin price gives a bullish breakout, an uptrend to $0.1735 will likely liquidate $14.18 million in short liquidations.
This could result in a short squeeze, further fueling the uptrend in DOGE price. Thus, it could fuel the Dogecoin price prediction of reaching the $0.20 mark.
Will Dogecoin Price Rally Suffer Due to 96M DOGE Token Unlock?
The short-term price movement and derivatives data signal a potential bullish move ahead. However, the meme coin will witness a minor surge in supply with token unlocks this week.
As per the tokenomist data, Dogecoin will witness an unlock of 97.89 million DOGE tokens worth $16.57 million in the next 7 days. This accounts for 0.07% of the entire circulating supply of Dogecoin, registering a minor supply spike.
However, the linear nature of the token unlock is unlikely to lead to any sharp correction moves.
The post Dogecoin Price Forecast: Nearly 1% of $1.65B DOGE OI at Risk of Liquidation at this Key Level appeared first on CoinGape.