Dogecoin Market Analysis: Short-term Decline Potential Ahead

Dogecoin (DOGE) has regained stability after a week of volatility, trading around $0.40 on Thursday. Despite a promising recovery from previous declines, technical indicators and on-chain data suggest a short-term downside potential. Here is a detailed analysis of market conditions affecting DOGE price volatility. Recent Price Performance Dogecoin soared to a new yearly high of $0.48 on November 23, only to face strong resistance at $0.44. This barrier triggered a downward correction, causing the coin to lose nearly 10% of its value in three days. On Wednesday, DOGE partially recovered, reaching $0.403 on Thursday. Key Technical Indicators Relative Strength Index (RSI): The daily RSI shows bearish divergence. While the price of DOGE reached a higher level on November 23rd, the RSI did not, instead forming a lower high. Such divergences often precede trend reversals or short-term pullbacks, indicating weak buying momentum.Moving Average Convergence Divergence (MACD): On Tuesday, the MACD entered the bearish zone, generating a sell signal. This indicates increasing selling pressure, which may contribute to further price decline.Fibonacci Retracement Levels: If the downtrend continues, DOGE could retest the 61.80% Fibonacci retracement level near $0.350. This level, derived from the low of $0.142 on November 3rd to the high of $0.480 on November 23rd, serves as a significant daily support level. Analysis On Chain The figures on the Dogecoin chain also paint a similarly cautious picture: Actual Network Profit/Loss (NPL): The NPL index from Santiment, tracking the realized profits or losses from on-chain transactions, has shown a significant increase since Monday. The increase in NPL indicates that many holders are locking in profits from recent price hikes. Historically, such sharp increases in NPL have coincided with subsequent price declines. For example, a similar pattern occurred in April, leading to a significant drop in the value of DOGE.Market Sentiment: The recent surge in NPL to a yearly peak on November 22 indicates heightened selling activity. This aligns with observations of investor profit-taking, contributing to downward price pressure. Outlook and key levels to watch If the downward trend continues: Immediate support level: $0.350 (61.80% Fibonacci retracement level).The next important support: $0.300, psychological level, and historical support zone. If DOGE can regain its upward momentum: Resistance levels: $0.420 (short-term resistance level) and $0.440 (major barrier level). Conclusion Part The market performance of Dogecoin is currently supporting a cautious stance. Although its potential for recovery indicates underlying investor interest, technical signals and on-chain selling pressure cannot be ignored. If selling pressure continues, DOGE may decline in the short term, possibly revisiting lower support levels. However, a sustained recovery above $0.420 could restore bullish sentiment, paving the way for a retest of higher resistance levels. Investors should keep a close eye on these important indicators and levels, as market sentiment and external factors may affect DOGE's trajectory in the coming days.