Dogecoin Slumps 2% After 200-Week SMA Rejection: What’s Next for Traders?

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Dogecoin has fallen by 2% amid bearish signals, with technical analysis suggesting further declines ahead. Crypto trader Kevin emphasized the bearish outlook, citing weaknesses in the weekly chart. After Dogecoin failed to break out of a six-month falling wedge, it faced strong resistance at the 200-week simple moving average (SMA).

This rejection led to the formation of a bearish engulfing candle, often seen as a sign of continued downward movement. Kevin warned that Dogecoin could soon re-enter the falling wedge pattern. If this happens, it could represent one of the most bearish setups he has observed in recent months.

Traders Urged to Reevaluate Positions

Altstein Trade, another trader, echoed Kevin’s concerns about Dogecoin’s performance. He referred to the 200 SMA rejection as “brutal” and advised traders to reconsider their positions before the meme coin plunges deeper. Altstein noted that while he is watching for a potential bounce, he remains cautious, stating, “I’m not holding my breath.”

On-Chain Data Shows Weakening Activity

Supporting this bearish outlook, on-chain metrics from IntoTheBlock highlight declining interest and participation in the Dogecoin market. Large transaction volume, for instance, increased by 10.3%, while daily active addresses dropped by 33.5%. Furthermore, the number of transactions exceeding $100,000 decreased sharply from 439 to 303 within just 24 hours.

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Adding to this, Dogecoin’s exchange netflows declined by 20.3%, further signaling weakness in market sentiment. Coinglass data reports that short liquidations hit $217,500, marking the lowest level since September 22.

Dogecoin Underperforms Shiba Inu

Over the past 24 hours, Dogecoin has traded down 1.9%, reaching $0.1043. This decline has brought its seven-day losses to approximately 9%. Despite seeing a 4.4% increase over the past 30 days, Dogecoin continues to underperform its rival Shiba Inu. Shiba Inu has risen by 19% over the same period, outperforming Dogecoin.

As the bearish sentiment deepens, traders will be closely watching for any potential signs of reversal. However, given the technical and on-chain signals, Dogecoin may continue facing headwinds in the short term.