Double Top Pattern Predicts Dogecoin Price May Crash 30%

Dogecoin (DOGE) price has dropped 26% from $0.1900, the highest level in May. Technical analysis suggests that DOGE may extend its decline due to the formation of a double top pattern. Whales offloading their tokens also increases the odds of this bearish forecast.

Dogecoin Price Analysis Shows Double Top Pattern Could Extend Losses

Technicals suggest that the DOGE price has more downsides this month. It has formed a double-top pattern at $0.2528, and a neckline at $0.2113. A double-top is a common bearish sign that signals that bulls are afraid of placing bullish trades above its upper side. 

Dogecoin price has crashed below the lower side of the neckline at $0.2113, its lowest point on May 17. It has also lost the support of the 50-day and 100-day Exponential Moving Averages (EMA).

DOGE is also forming a tiny bearish flag pattern that could point to more sell-off in the next few days. If this happens, the next target to watch could be at $0.1300, its lowest point in April, which is about 31% below the current level. 

A crash below $0.1300 is risky because the only major support after that is at $0.08057, its lowest level in August last year, which is 57% below the current level. 

DOGE Whales Offload Their Holdings

There is an increasing risk that the Dogecoin price will crash by at least 30% and move to its lowest level this year. One potential catalyst for the sell-off is that whales have started to sell DOGE.

Santiment data shows that DOGE holders with between 100,000 and 1 million coins have reduced their holdings in the past few months. These investors now hold 8.93 billion coins, down from 9.2 billion in March. Similarly, those holding between 100 million and 1 billion tokens hold 26 billion, down from last month’s high of 26.45 billion. 

Whale exits is usually a bearish sign because of the amount of coins they hold. In some instances, some whales are also seen as ‘smart money investors’ who are more experienced than retail traders. 

A key reason for the selling is that June is usually one of the worst months for cryptocurrencies. CoinGlass data shows that the prices of Bitcoin and Ethereum often retreat in June, partially because investors typically take summer holidays. 

Another subtle reason is that Elon Musk, Dogecoin’s biggest promoter, has left his White House role as the head of the Department of Government Efficiency (DOGE).

Final Thoughts

An invalidation of the bearish thesis outlined due to the double top pattern and whales offloading DOGE tokens can occur if the price manages to flip the resistance level at $0.2113 into a support floor. This will suggest a flip of the market structure favoring bulls.

For Dogecoin’s long-term price prediction: Read This