Dogecoin has seen a sharp 20% drop from recent highs, but technical and on-chain indicators suggest a possible comeback may be brewing. Despite the dip, market analysts are closely watching three key signals that could point to a potential breakout. As the  coin hovers near crucial support levels, optimism is quietly growing in both trading circles and the broader crypto community.

DOGE Tests Key Support at $0.167

At the time of writing, Dogecoin is trading at $0.169—just above its long-established support level of $0.167. This zone has historically acted as a price floor and has triggered multiple upward reversals since April 2025. For many traders, this level has become a critical reference point, offering a possible start for the next bullish move.

Technical charts reveal that DOGE has printed six consecutive red candles on the daily chart. While this might typically suggest strong downward pressure, the opposite may be true here. Analysts argue that the asset’s refusal to break below $0.167 could indicate exhaustion in the selling momentum.

Bullish Divergence Signals Potential Rebound

One of the most compelling signs comes from the Relative Strength Index (RSI), a momentum indicator. Despite Dogecoin printing lower lows on its price chart, the RSI has formed higher highs—a classic sign of bullish divergence.

This pattern typically occurs when bearish momentum fades even as price continues to fall. It’s often interpreted as a leading signal of trend reversal, particularly when combined with strong support zones. If buying pressure increases in the coming days, this divergence could translate into a substantial price recovery.

Trading Volume Declines—A Positive Sign?

Interestingly, Dogecoin’s recent price dip has been accompanied by a 15% decline in trading volume. While this might seem counterintuitive, the drop in volume during a downtrend can indicate weakening sell pressure. In other words, fewer traders are interested in pushing the price lower, which often precedes a shift in market direction.

This calm, low-volume period could be the quiet before a significant move—especially with attention now returning to the token amid renewed social media buzz.

Social Sentiment Turns Bullish

Despite its struggles, Dogecoin remains one of the most talked-about digital assets online. Posts on social platforms like X (formerly Twitter) have highlighted chart patterns that resemble past breakout structures. One crypto influencer wrote, “Dogecoin is repeating its previous move… It’s targeting the $0.60 zone.”

Another analyst went further, posting, “DOGE is on the verge of a massive breakout… This chart looks insane.” These posts have drawn the attention of traders who follow sentiment-driven plays, particularly in tokens with strong community support like Dogecoin.

This surge in online chatter typically leads to increased interest and trading activity. As more traders begin to eye DOGE’s chart setup, the potential for a momentum-driven move increases.

$31 Million in Exchange Outflows

The bullish case for Dogecoin is also supported by on-chain data. According to CoinGlass, Dogecoin experienced $31.38 million in exchange outflows over a 48-hour period. This suggests that a significant amount of DOGE was withdrawn from trading platforms—likely into cold storage or personal wallets.

Such movements are often viewed as signs of accumulation. When coins leave exchanges, they are typically less likely to be sold immediately, reducing near-term selling pressure and hinting at investor confidence in long-term gains.

If accumulation continues and is followed by a demand increase, the resulting supply crunch could fuel a quick price surge.

What’s Next for DOGE?

From a technical perspective, Dogecoin needs to maintain support above $0.164 to preserve its current structure. Should it hold this level, traders are targeting a move toward the $0.20 resistance area—a potential 18% upside in the short term.

Still, the bigger challenge lies in reclaiming the 200-day Exponential Moving Average (EMA). DOGE currently trades below this long-term trend indicator, meaning the macro trend remains bearish for now. A decisive breakout above the 200-day EMA would signal a stronger shift in momentum and could open the door for more ambitious targets.

Until then, Dogecoin’s outlook remains cautiously optimistic: it’s showing promising signs without confirmation of a breakout just yet.

Final Thoughts

Dogecoin’s 20% decline may look discouraging at first glance, but under the surface, key signals are flashing green. A strong support level, bullish divergence on the RSI, shrinking trading volume, and rising accumulation are combining to suggest that DOGE could be poised for a notable rebound.

Social sentiment is also heating up, drawing in fresh attention from traders who’ve seen this pattern before. If history repeats, Dogecoin might soon surprise the market with another rally—especially if buyers regain control and push it beyond key resistance levels.

With its price currently near a make-or-break zone, all eyes are on whether this digital asset can turn its technical setup into a breakout rally in the days ahead.