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Dogecoin’s price fell again to below $0.2 after the price of Bitcoin fell below the $104,000 level over the weekend. Understandably, this move shocked the community because $0.2 has been around for a long time. However, using a 4-hour order block (OB), a crypto analyst explained the situation with Dogecoin prices, why the decline happened and the next step can be moved forward.
Dogecoin prices experience liquidity
Crypto analyst Smart Flow pointed out an interesting development on the Dogecoin price chart on the TradingView website. This shows why the price of the meme coins dropped to a psychological support level of $0.2, and this clear description boils down to something as clean as liquidity.
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Crypto analysts use 4-hour order blocks on the Dogecoin price chart to explain this, starting at a price level above the $0.22. This allowed liquidity to cross the fair value gap (FVG) at the 0.5 Fibonacci level, breaking the $0.2 support. Smart Flow explained that the move was by no means emotional, but more like a “mechanical” move, which suggests it was designed.
The result of this liquidity sweeping is that sentiment surrounding Dogecoin prices is now present, laying the foundation for a potential reversal. If this is the case, then Dogecoin may be sitting at the next big rally above $0.2.
What to expect from here next
According to the crypto analyst, Dogecoin is now sitting in a 4-hour demand order area that converges to over $0.2 with the Fair Value Gap (FVG). This makes the $0.20928 level the first “key reaction point”, where analysts point out two possibilities for meme coins: either the price continues to drop or the merger begins at this level.
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Basically, Dogecoin’s price has to be able to beat the first major test for $0.209 before moving from here. This means it must complete the clearance of the FVG to get the liquidity above. After this, the actual test starts at $0.22,094, with the next major 4-hour order block located in it. Analysts explain that being able to clear the FVG will mean that the ongoing model is working.
However, it is still possible to reject Dogecoin’s price before being able to clear the FVG to $0.2. In this case, it could bring a further downward trend to the altcoin. “If we reject early – this tells me that the allocation has begun, I will prepare a minor scan below 0.18 to retest the deeper 4HOB near 0.16387,” the analyst concluded.
Featured pictures from dall.e, charts from tradingview.com
