Dogecoin (DOGE) has always been known for its volatile price swings, but its current price action is approaching a critical crossroads. A prominent analyst has warned that if DOGE fails to break through key Fibonacci retracement levels, the cryptocurrency coin could face a significant downturn, prompting traders to consider selling.

The Critical Fibonacci Levels for DOGE

As DOGE’s price edges closer to two crucial Fibonacci retracement levels — 0.702 and 0.786 — it is poised for a decisive move. According to the analyst known as Charting Guy, these levels will determine whether Dogecoin continues to rise or experiences a sharp correction. In the world of technical analysis, Fibonacci levels are often used to identify key support and resistance zones, and for DOGE, the 0.702 and 0.786 retracement levels have historically been significant barriers.

If DOGE manages to break above the 0.786 level, it could trigger a rally, potentially pushing the price toward the psychological $1 mark. However, if the price fails to break through these levels, the analyst predicts that DOGE could enter a bearish phase, in line with previous market cycles.

What Happens If DOGE Fails to Break Through Key Levels?

A failure to surpass the 0.702 or 0.786 Fibonacci levels could lead to a sharp decline in DOGE’s price. Charting Guy suggests that if this scenario unfolds, he may decide to sell his DOGE holdings, warning other traders to watch closely. This type of sell-off could signal the beginning of another bearish phase for DOGE, which would follow a similar pattern seen in previous price cycles.

In the event of a failed breakout, DOGE could retreat to lower support levels, with the 0.382 Fibonacci retracement level being a key zone to watch. If that level fails to hold, DOGE could revisit cycle lows near the $0.049 mark, marking a substantial decline from current levels.

Timeline for Potential Market Top and Correction

Technicals suggest that DOGE may be nearing a top, with the best chance of reaching this peak by late April or early May. At the time of writing, the Relative Strength Index (RSI) on DOGE’s daily chart remains below 40, which is a signal of weak momentum. Although this indicates potential oversold conditions and may result in a short-term bounce, a sustained uptrend will require the RSI to break above the 50 mark.

Moreover, On-Balance Volume (OBV) has been steadily declining, indicating a lack of strong buying pressure despite occasional price spikes. This could suggest that Dogecoin’s rally lacks the necessary momentum to sustain further gains.

Social Sentiment and Whale Activity

Historically, DOGE rallies have been driven by strong social sentiment and whale activity. As such, continued enthusiasm from social media and large investors will be crucial for pushing the price higher. However, if these factors wane, DOGE may struggle to break past key resistance levels, increasing the likelihood of a correction.

With a possible major top approaching, traders should keep a close eye on DOGE’s price action as it nears the critical Fibonacci retracement levels. If it fails to break through, selling may be the wisest choice before the market shifts into a bearish phase.

Conclusion

Dogecoin’s current price movement is at a critical juncture. The key Fibonacci levels at 0.702 and 0.786 will play a pivotal role in determining whether DOGE continues its upward trajectory or faces a sell-off. Traders should monitor these levels closely and be prepared for a potential downturn if DOGE fails to break through them. With historical trends and technical indicators pointing to a possible local top in late April or early May, this could be the defining moment for DOGE’s next move.