Dogecoin risks extended fall as Elon Musk exits DOGE

• Musk will meet President Trump on his last working day as a Special Government Employee on Friday.
• Dogecoin has fallen significantly this week, putting the early May gains at risk. 
• The technical outlook suggests a steeper correction as bullish momentum declines. 

Dogecoin (DOGE) is down over 3% at press time on Friday as market volatility aligns with Elon Musk’s 130-day term as Special Government Employee, heading the Department of Government Efficiency (D.O.G.E.). Amidst the exit of Dogefather from federal responsibilities, President Donald Trump announces a press conference at the Oval Office on Friday at 1:30 P.M. EST, while Dogecoin risks a downfall below the $0.20 support. 

As headwinds grow, the technical outlook reveals a decline in bullish momentum coupled with rising long liquidations and falling open interest rates. 

Dogecoin hits $0.20 as sellers regain control

Dogecoin (DOGE) trades at $0.2085 after a 7% drop over the last 24 hours at press time. The meme coin tests the crucial $0.20 support zone, aligning with the 50-day Exponential Moving Average (EMA) at $0.2061.

Dogecoin is down over 7% this week, piling on the 3.49% drop a week before, which projects a bearish reversal. The price action breaks down the 100- and 200-day EMAs at $0.21 and $0.2177, respectively, indicating a new downtrend at play. 

The momentum indicators indicate a sharp plunge in bullish momentum as the Moving Average Convergence/Divergence (MACD) and signal line fall towards the centre line after a bearish crossover and a surge in negative histogram bars. 

Additionally, the Relative Strength Index (RSI) is down at 46 under the halfway level, indicating a bearish trend in motion. As RSI is well above the oversold boundary line at 30, the indicator warns of room for a steeper correction, hinting at the potential breakdown of the $0.20 support level.

As per the price action analysis, a clean push in the closing price below $0.20 will mark a selling signal. Traders could find an entry opportunity at the breakdown with the next support level at $0.1688 as a potential target. In case of an extended downfall below $0.1688, traders could follow the trend with a trailing stop loss and the price target at $0.1421. 

DOGE/USDT daily price chart. Source: Tradingview

However, a bounce back in Dogecoin above the 200-day EMA at $0.2177 will invalidate the bearish thesis. In such a case, DOGE could resurge to the $0.25 immediate resistance. Traders can take advantage of a potential $0.25 breakout, targeting the next resistance at $0.2846. 

Declining bullish interest crashes DOGE open interest

The sudden overnight drop in Dogecoin leads to a sentimental shift in the derivatives market, with the shakeout of buyers. According to Coinglass data, the long liquidations in the last 24 hours account for $20 million, nearly four times the amount of $532K in short liquidations. 

Dogecoin Derivatives Data. Source: Coinglass

Amid the forced liquidation of long positions, declining bullish interest has led to a 10% decline in Open Interest (OI) to $2.44 billion. Additionally, the OI-weighted funding rate is down to near-zero levels from the 0.0107% peak on Thursday, as the traders’ intent turns bearish as the cycle shifts.