Dogecoin (DOGE) appears to be quietly preparing for a significant move after a period of consolidation that has investors watching closely. After spending the last week trading within a narrow range between $0.14 and $0.17, the cryptocurrency is showing signs of setting up a classic bear trap—where bearish traders get caught off guard as prices unexpectedly surge. This pattern suggests that DOGE may be gearing up for a breakout, potentially targeting the $0.20 level if bullish momentum returns.

Over the past few weeks, DOGE has been bouncing repeatedly off a critical support level near $0.14, a price point last tested in early April. This strong floor has provided a springboard during the early days of the final quarter of the second quarter, giving bulls a chance to regain control. Historically, such compression or “coiling” phases—where price movements become tighter and less volatile—often precede sudden and significant price breakouts. Market participants are now closely watching to see if DOGE will follow this trend and make a push higher.

Despite these promising signs, the setup remains fragile. Since peaking around $0.25 in early May, Dogecoin has attempted to break above this level three times, only to see each breakout fail. These failures were accompanied by sharp long liquidations—forced selling of leveraged long positions—indicating weak follow-through from buyers. The repeated setbacks have contributed to a bearish market structure, reinforced by the fact that the price has made four consecutive lower lows within a 60-day period. This pattern signals underlying selling pressure and uncertainty, leaving the overall outlook cautious.

On the derivatives side, data from Binance reveals that DOGE/USDT perpetual contracts have about 75% of traders holding long positions, showing strong conviction among bullish traders. However, this skewed positioning also carries risks. A heavy concentration of longs can lead to a “crowded trade,” where a sudden price drop triggers liquidations that amplify downward momentum. This scenario could repeat the cycle of volatility seen in recent months.

But there is another way to interpret the current market. If this long-biased positioning is driven by genuine on-chain demand and strategic accumulation, it could mean the market is stabilizing after a period of deleveraging. This would support the idea that the recent consolidation isn’t indecision but a deliberate buildup of positions in anticipation of an upward move. Such a scenario sets the stage for a textbook bear trap, where short sellers expecting a further decline are caught off guard by a sudden rally.

Looking deeper at recent price action, Dogecoin’s 32% fall from its May high of $0.25 wasn’t just a routine pullback. It represented a significant “leverage flush,” where overextended bullish traders were forced to liquidate their positions. At its peak, long liquidations accounted for over 96% of all liquidations—a clear sign that excessive bullish bets had to be unwound. This forced selling drove prices down but also cleared the way for a healthier market structure.

Since then, the market has shown signs of recovery. Long liquidation dominance—the share of liquidations coming from long positions—has dropped dramatically to around 6%, the lowest level recorded this month. This cooling off suggests that the worst of the forced selling is behind us and that the market is no longer dominated by panic-driven liquidations.

More importantly, when liquidation dominance spiked again near the end of June, the price of DOGE did not collapse as it did in May. Instead, it held steady, indicating that market structure may be strengthening beneath the surface. This resilience implies that current long positions could be strategic, reflecting thoughtful accumulation rather than reckless leveraging.

If this interpretation holds, Dogecoin may be setting up a classic bear trap—a situation where short sellers who expect prices to fall further end up squeezed out as the price rises sharply. The trapped shorts are forced to buy back positions at higher prices, which can rapidly accelerate upward momentum. In this case, a successful breakout above the current range could send DOGE toward the $0.20 mark, a key resistance level investors are eyeing.

In summary, Dogecoin is currently consolidating within a tight range, bouncing off a well-established support level. While the market structure has shown bearish characteristics recently, signs of reduced liquidation pressure and strong long positioning suggest that a bear trap may be forming. Traders should watch for a breakout above $0.17, as it could trigger a sharp move toward $0.20 and catch many short sellers off guard.

As always, market participants should stay vigilant, as cryptocurrencies remain volatile and unpredictable. However, the current signals offer an intriguing setup for Dogecoin, blending caution with the possibility of a strong bullish breakout.