The coin could test lower support levels, amplified by higher short positions in the market.
- Dogecoin’s sentiment has fallen badly with indicators suggesting that another correction was close. A breakdown to $0.10 seemed possible as the coin could dump below the lower support line.
Pessimistic! This exact word describes the sentiment traders have toward Dogecoin [DOGE]. Evidence of this was reflected in the Long/Short Ratio. According to Coinglass, the Long/Short Ratio was 0.90.
The Long/Short Ratio is a barometer of trader expectations. The ratio is calculated by dividing the number of long positions by that of shorts. If the reading is above 1, it means that there are more long positions than shorts, suggesting positive sentiment.
However, a reading of less than 1 indicates that short positions are more than longs. In this case, most traders expect the price of DOGE to decrease.
At press time, Dogecoin’s price was $0.15. This value represented a 6.44% increase in the last seven days. Going by the appetite in the market, bearish forces might dominate the market, and DOGE could be set to fall.
Source: Coinglass
Confidence in the coin drops
Previously, AMBCrypto explained how the price of the coin could drop to $0.12. Whether DOGE will hit the price or not depends on some other factors.
One indicator that could influence the directional movement is Funding Rate. This metric is similar to the ratio mentioned above but a little different.
Funding is the cost of holding an open contract position. When the metric is positive, it means that the contract price is valued higher than the spot price.
On the other hand, a negative reading suggests that the perp price is lower than the index value. According to Santiment, Dogecoin’s funding was 0.01%. But as funding moved lower, so did DOGE’s price in the last 24 hours.
This implies that perp sellers might start to get rewards for their positions. From a price perspective, this is a relatively bearish bias that could kick DOGE in the butt.
Source: Santiment
DOGE plunges traders into the deep blue sea
Considering the momentum displayed, Dogecoin could dump to the next underlying support. Furthermore, the total DOGE liquidations in the last 24 hours were worth $1.79 million.
Out of the total, longs were $1.54 million while shorts were less than $250,000. Liquidations occur when an exchange forcefully closes the leveraged position of traders.
This could be because of a partial or total loss of the initial margin. It is noteworthy to mention that liquidations can be trend-forming for prices.
Source: Coinglass
From a trading perspective, the long liquidations indicate that DOGE’s price might rally into the overhead resistance. Perhaps, that could be for another day.
This time, the long liquidations en masses put DOGE at risk. In a highly bearish circumstance, the price of the coin could slip below $0.12.
Should selling pressure intensify from this point, DOGE could decline to $0.10.
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