Dogecoin price threatened by 20% sell-off as DOGE bears take control

Dogecoin price appears to be ready for another drop as buyers are nowhere to be found. The prevailing chart pattern suggests that the DOGE plunge is not over yet, as the bears aim for $0.16.

Dogecoin price slumps as bulls retreat

Dogecoin price has already suffered a drop of nearly 20% since September 18. However, it seems the correction is not over yet, as the buyers do not appear to be stepping in to lift prices higher.

On the daily chart, Dogecoin price has presented a bear pennant technical pattern, suggesting a pessimistic outlook for DOGE. By measuring the flagpole of the chart pattern, the meme token is expected to crash 33% from the breakout of the lower boundary of the pennant.

Although the bears have initiated a takeover, Dogecoin price was fortunate enough to be supported by the 78.6% Fibonacci retracement level at $0.20, which sits near the support line given by the Momentum Reversal Indicator (MRI).

Prior to dropping to the bearish target at $0.16, further support may emerge at $0.18, the June 23 and July 15 lows.

Adding credence to the pessimistic outlook is the Arms Index (TRIN), which gauges overall market sentiment. If the indicator is flashing a number above 1.0, it is a bearish signal suggesting that there is greater selling volume than buying volume.

DOGE/USDT daily chart

However, should the bulls wake up and attempt a recovery, Dogecoin price would face its next resistance at $0.21, before seeking to tag the 61.8% Fibonacci retracement level at $0.23. 

A spike in buy orders may incentivize DOGE to target the downside trend line of the technical pattern at $0.24, which coincides with the 100-day Simple Moving Average (SMA). Additional buying pressure would see Dogecoin price reach the 200-day SMA at $0.25.

However, only a massive commitment from the bulls could see the Dogecoin price reverse the period of underperformance in the near term as the overall crypto market continues to slump further in light of financial markets sentiment following the China Evergrande crisis.