$766M Short Liquidations Pointing to a Dogecoin Price Reversal?

Dogecoin (DOGE) saw heightened trading activity marked by a surge in net longs and slippage, signaled an imminent price reversal. The spikes coincided with each Dogecoin price local top, which subsequently led to significant price declines.

Initially, the price of DOGE showed resilience, trading sideways after the first spike in net longs and slippage.

However, as the spikes became more pronounced, they consistently preceded sharp falls. This confirmed the pattern that excessive buying enthusiasm (FOMO) often leads to unsustainable price levels.

The most recent data points indicate a sharp decline following the latest local top. Around this level the price plummeted from around $0.36 to under $0.32.

This suggested that traders entering DOGE positions during these spikes were likely buying at a peak. Only to see the value of their investments decline shortly thereafter. The spikes served as a warning signal for potential sell-offs.

If DOGE continues to show similar patterns of spikes in net longs and slippage followed by declines, it could indicate ongoing volatility with possible further downsides.

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Massive Leveraged Short Positions Risk Liquidation

DOGE Liquidation Heatmap showed if price were to rebound to $0.35, an estimated $766.45 Million in short positions is poised for liquidation. This suggests a sharp increase in buy pressure that could further drive the price upward.

This scenario unfolded as the market’s volatility mirrored a rollercoaster ride, with sharp declines followed by rapid recoveries.

The concentrated liquidation points around $0.35 highlighted where the majority of short positions could be squeezed. It could lead to a rapid price increase.

If Dogecoin reaches this level, the resulting short squeeze could propel the price even higher. As short sellers rush to cover their positions it could add to the upward momentum.

Conversely, if Dogecoin fails to reach this liquidation trigger point, the existing downtrend might continue as the market lacks the catalyst needed for a rebound. This could lead to a stabilization below current levels or further declines if bearish sentiment persists.

A breach above $0.35 could signal the beginning of a recovery phase fueled by the unwinding of short positions, while failure to achieve this could maintain the current bearish market structure.

Bull-flag Pattern on Dogecoin Price Action Suggests…

Looking at the price action of DOGE/USDT, a bull flag pattern suggested potential reversal could occur near the current range lows around $0.28.

The sell side deviation noted around the $0.35 region indicated where sellers began to overpower buyers, leading to the pullback.

Despite the bearish signs, the formation of a bull flag typically signaled continuation of the prior uptrend, which could imply an impending rise if volume support materializes.

The volume profile peaked at lower price levels near $0.21 and less, indicating a lack of strong buyer interest at higher levels. This could limit the potential for a sustained upward move unless volume increases significantly.

On the downside, if the bull flag does not validate due to the absence of volume, DOGE could see further declines, potentially testing lower support levels.

Conversely, if buying momentum increases and DOGE breaks above the flag pattern, it could target previous highs near $0.35.

This would align with the flag’s predictive nature but depends heavily on a resurgence in trade volume and overall market sentiment becoming more bullish.