Dogecoin, the leading dog-themed digital asset, has extended its decline amid widespread market corrections. Over the last 24 hours, DOGE dropped 6.74%, falling to $0.2168 as bearish momentum intensified across the broader crypto space. With a spike in long liquidations and fading bullish conviction, questions now loom over whether Dogecoin can defend its next key support level at $0.2060.

The decline comes amid a tough trading week for speculative cryptocurrencies, which are more vulnerable during market downturns. While Dogecoin had recently shown signs of recovery, the current technical structure suggests that momentum is fading fast.

Technical Breakdown: DOGE at Crossroads

Dogecoin’s daily chart highlights a troubling setup. The asset continues to trade within a larger downtrend, characterized by a descending resistance line that has remained intact since December 2024. This trendline has consistently rejected attempts at a breakout and reflects persistent lower highs in price action.

At the center of current price action lies an emerging inverted head-and-shoulders formation. This is typically a bullish reversal pattern, suggesting a potential change in trend. The neckline of the pattern aligns with a significant supply zone around $0.25, along with the 50% Fibonacci retracement level at $0.2566.

However, the recent drop has pushed Dogecoin below the 38.20% Fibonacci level at $0.2227. More importantly, the price is now testing the 200-day Exponential Moving Average (EMA) at $0.2168. This support level is critical; a sustained breakdown below it could negate the bullish reversal pattern and open the door to deeper losses.

Should selling pressure persist, DOGE risks slipping toward the 100-day EMA at $0.2060. A decisive move below this level would invalidate the bullish setup entirely, putting the next downside target near $0.1869 — which coincides with the 23.60% Fibonacci level.

Conversely, a successful bounce from the current support could revive bullish hopes. A breakout above the neckline resistance would confirm the reversal pattern, potentially triggering a rally toward the $0.50 level — a 95% increase from current prices. However, this bullish scenario hinges on improving sentiment and a reversal in current futures market dynamics.

Futures Data Paints a Bearish Picture

In the derivatives market, Dogecoin is experiencing clear signs of weakening sentiment. Long positions are being forcefully exited, with more than $12.5 million in long liquidations occurring in just 24 hours. This suggests that leveraged traders betting on upside are getting wiped out as the price continues to slide.

In addition to liquidations, open interest — the total number of active futures contracts — has declined by 1.55%, falling to $2.64 billion. This drop signals reduced trader engagement and an increasing likelihood that short-term traders are closing positions, potentially bracing for more volatility.

The long-to-short ratio over the same period stands at 0.9612, indicating a slight bias toward short positions. While not dramatically bearish, this figure confirms that sellers are gradually gaining control.

Adding to the concern is the sharp fall in the funding rate — the fee paid between traders to balance long and short positions. Dogecoin’s open interest-weighted funding rate dropped to just 0.0014%, down from a recent high of 0.0097%. This decline reflects a notable decrease in bullish enthusiasm, as traders grow more reluctant to pay premiums to maintain long positions.

Outlook: Market Caution Dominates

Dogecoin’s short-term outlook is teetering on a critical edge. If the broader crypto correction deepens and key technical supports fail, DOGE could face a sharper decline in the days ahead. The $0.2060 level will be closely watched as a make-or-break zone for bulls hoping to maintain a constructive pattern.

On the flip side, a rebound from current levels and a decisive breakout above the $0.25-$0.26 range could turn the tide and confirm a bullish reversal. For now, however, derivatives data, declining interest, and increasing liquidations suggest that caution remains the dominant theme in the Dogecoin market.