Dogecoin price forms double top pattern as futures OI declines, is a crash ahead?

Dogecoin price slid 8% lower on Monday as the crypto market continued its downtrend that began late last week.

According to data from crypto.news, Dogecoin (DOGE) fell to a multi-week low on Monday after dropping 8% to $0.126 as renewed trade tensions between the U.S. and the EU hurt investor appetite for risky assets.

Risk sentiment faded after U.S. President Donald Trump threatened fresh tariffs against European allies over the Greenland acquisition dispute. This precipitated into a wave of profit-taking across the cryptocurrency sector as investors rotated into safe-haven assets.

While dip buyers managed to contribute to some recovery for the token earlier in the week, they were quickly overwhelmed by bears who dragged it back toward the $0.127 level seen at press time. 

At the same time, demand for the token on the futures market has fallen. Data from CoinGlass shows that Dogecoin futures open interest declined by approximately 19%, dropping from $1.78 billion recorded on Sunday to $1.44 billion today.

Open interest is the total number of outstanding derivative contracts that have not yet been settled. A decline in open interest means there is less capital entering the market and lower speculative interest, which tends to lower price volatility and weaken existing upward momentum. 

Another potential bearish catalyst for the meme token is the rising volume of DOGE tokens moved to exchanges. Data from Nansen shows that total tokens held by exchanges increased by nearly 8.4% to 31.4 million over the past 30 days.

Investors usually transfer their holdings to exchanges when they are preparing to sell, either to lock in profits or avoid losses.

Dogecoin’s daily chart has carved out a classic double top formation. After two unsuccessful attempts to breach a key resistance level, bulls failed to establish a higher high. This is a telltale sign that buying pressure is fading and could potentially open the door for a trend reversal.

Supporting the bearish outlook, the MACD lines were pointing downwards. Meanwhile, the Aroon indicators showed the Aroon Down was at 92.86% while the Aroon Up was at 0%, as bears continue to dominate the market.

For now, traders will be closely watching the $0.10 psychological support level, as a breakdown below that would lead to a drop from a resistance slash support flip and could thus lead to more losses. On the contrary, a rebound above $0.154 would invalidate the bearish setup.

When writing, Dogecoin price was hovering a little over $0.127.