Why Dogecoin (DOGE) Price is Down Today: Overbought Signals and Profit-Taking

According to Cointelegraph: Dogecoin (DOGE) is down today as traders capitalize on recent gains from the “Trump trade.” After reaching its highest level in five months, DOGE’s price correction suggests a profit-taking trend among traders following Donald Trump’s election win.DOGE Rally Shows Signs of OverheatingDOGE’s price fell by about 14% from a local high of $0.218, settling around $0.188 on November 7. The price dip comes as DOGE’s daily Relative Strength Index (RSI) crossed above 70, signaling an “overbought” condition. This RSI threshold often suggests that bullish momentum may be waning, leading to potential short-term pullbacks as the rally cools off. Additionally, DOGE’s recent RSI peak of 74.91 is lower than the October 9 high of 79.57, creating a divergence that could indicate weakening buying momentum.DOGE Futures Reflect Market IndecisionDOGE’s pullback coincides with a volatile futures market. Following Trump’s win, DOGE recorded around $63.83 million in liquidations, with nearly equal amounts in long and short positions. This balance of long and short liquidations indicates a turbulent market, with traders on both sides experiencing sharp price swings. High volatility in DOGE futures may prompt some traders to quickly lock in profits, contributing to today’s price retreat.DOGE Correction Risks and Key Resistance ZoneToday’s decline aligns with a recurring pattern as DOGE tests a long-standing resistance zone. This resistance level has served as a ceiling for DOGE since November 2021, with each test resulting in major corrections of 60% to 80%. If DOGE fails to break through, it risks a similar pullback, with the 50-week EMA at $0.120 potentially acting as a downside target for 2025.However, a decisive breakout above this resistance could pave the way for another rally, potentially reaching $0.221 by 2025, particularly if Trump’s pro-crypto stance and hype around Elon Musk’s hypothetical Department of Government Efficiency (D.O.G.E.) drive fresh momentum.