The Dogecoin price has just discovered that gravity exists. DOGE has dropped in the past three consecutive days and is trading at $0.2810, which is more than 37% lower than its highest level this week. Its market cap has dropped to more than $36 billion and its ranking has fallen to number 7.
What happened: Dogecoin has been an excellent story to watch. The cryptocurrency that was started as a mere joke, has recently rallied by more than 4,000% this year and became one the best performing digital currencies in the world.
As I have written before, this growth was not based on fundamentals. Instead, it was built around social media hype from the likes of Mark Cuban and Elon Musk. Furthermore, very few companies accept Doge in their retail or e-commerce stores.
After reaching its all-time high of $0.4467, the currency has been falling as sentiment soars and as some investors rush to take profit. So, is this the end of the DOGE price rally? Possibly not. That’s because, while the currency seems overvalued, we are in a period of irrational exuberance. This means that the price may resume the upward trend.
On the four-hour chart, we see that the DOGE price has been in a strong downward trend after it formed what looks like a double top pattern. Along the way, the 25-period and 15-period weighted moving averages (WMA) have made a bearish crossover pattern. It has also moved below the 38.2% Fibonacci retracement level.
Therefore, in my view, the outlook for the Dogecoin price is neutral. A steeper downward trend will be confirmed if the price moves below the 50% Fibonacci retracement level at $0.25. If this happens, the currency will likely fall below $0.20. However, a move above the 23.6% retracement will open the possibility of the price rising above its all-time high.
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