TL;DR
Dogecoin prints a TD Sequential buy at $0.263 after a sharp 10% price drop. Weekly chart breakout offers 1:29 risk-reward setup with a projected target near $1.70. Open Interest climbs as shorts pile in, setting up conditions for a possible short squeeze.
Dogecoin (DOGE) was trading at $0.26 at press time, with a 24-hour trading volume of $6.15 billion. The asset has dropped 10% in the past day but remains up 13% over the past week. The recent drop comes after a multi-day rally, and one technical tool now points to a possible pause in the downtrend.
Crypto analyst Ali Martinez shared that the TD Sequential indicator has printed a buy signal on the 4-hour chart. The setup appeared near the $0.263 mark. This tool is often used by traders to spot potential reversals after extended moves in either direction. According to Martinez,
Buy the Dogecoin $DOGE dip, says the TD Sequential indicator! pic.twitter.com/N6RmDaDYD4
While the signal may suggest that sellers are losing strength, traders will likely wait for further signs, such as a shift in volume or price confirmation, before reacting.
A broader pattern has formed on the weekly timeframe. According to Trader Tardigrade, DOGE has broken out of a long-term symmetrical triangle, which formed over several months and is marked by converging highs and lows.
Interestingly, the breakout came with a candle close above the upper trendline, pointing to a possible move higher. The setup carries a projected 1:29 risk-to-reward ratio, with a target near $1.70.
The suggested entry zone is around $0.27, while downside risk is placed below $0.20. These types of structures are commonly used to frame trades around breakout zones after long periods of price compression.
In addition, DOGE may also be forming a Power of Three (PO3) setup on the 1-hour chart. This model divides the price action into three stages: accumulation, manipulation, and distribution. The chart shared by Trader Tardigrade shows DOGE moving from a sideways range into a short decline, often viewed as the manipulation phase.
$Doge/hourly#Dogecoin might be forming a Power of Three (PO3) trading setup pic.twitter.com/AZPMuI69gy
If the setup plays out as expected, the price could shift into the distribution phase, which typically involves a move higher. In this case, the next resistance area is seen around $0.33, based on past structure.
On lower timeframes, DOGE is seeing increased short interest. Analyst Cryptoinsightuk noted that Open Interest rose to 9.02 billion, while the funding premium turned negative at -0.0078. Spot volume also increased, showing higher market activity.
The analyst stated,
“Likely to see a strong reversal bounce at some point soon as these late shorts get squeezed.”
In a downtrend, where a negative premium may also exist, and during which open interest increases, it is hazardous to think of the selling parties taking a position late in the move. If buyers do come through, short positions may be unwound with haste.
A price drop shall manifest itself, assisting one in deciding whether this is a favorable bounce or the onset of an extensive reversal.