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Dogecoin consolidates – Is DOGE setting up a bear trap for $0.20?
The price action of Dogecoin (DOGE) has been consolidating in a tight range with repeated bounces off a key support, leaving market observers wondering if the current compression phase might be the calm before a volatility breakout. The cryptocurrency may be priming for its next directional move.
Following a week spent coiling between $0.14 and $0.17, price action is mimicking prior compression phases that have often preceded sharp breakouts. Notably, DOGE rebounded at the start of the final week of Q2, bouncing off a key support zone last tested in early April. This level could serve as a springboard for a push toward $0.20 if bulls regain momentum.
However, the setup remains fragile. Following its peak near $0.25 in early May, DOGE has seen three failed breakout attempts, each met with sharp long liquidations, signaling weak follow-through from buyers. In fact, the most recent drop to $0.14 marked the fourth consecutive lower low within a 60-day window, reinforcing bearish market structure.
On the derivatives side, Binance’s DOGE/USDT perpetuals are showcasing a 75% long dominance, underscoring strong trader conviction. However, such heavily skewed positioning also amplifies the risk of a crowded trade, thus raising the likelihood of another long-side liquidity sweep. Conversely, if robust on-chain demand drives this leveraged positioning, then DOGE’s current consolidation likely signals strategic accumulation rather than market indecision.
DOGE’s leverage unwind hints at market stabilization
DOGE’s recent price action reveals more than just surface-level volatility. As the chart shows, the 32% drop from its early-May high of $0.25 wasn’t merely a technical pullback. Instead, it marked a full-scale leverage flush. The long liquidation dominance spiked to 96.29% as overextended bulls were forced to unwind.
What followed, however, signals potential shift in market structure. Liquidation dominance has since cooled sharply, dropping to just 6.14%, marking its lowest level this month and hinting that the worst of the leverage bleed may be over. Even more telling: When liquidation dominance spiked to 97.56% on June 21st, DOGE didn’t roll over like it did in May. That resilience could be a sign that the market’s structure is stabilizing beneath the surface.
In this context, the current long bias might represent post-flush strategic accumulation rather than reckless leverage. This could set the stage for a classic bear trap, with late shorts potentially fueling a squeeze toward $0.20.
Source: ambcrypto.com
