Dogecoin retests $0.048–$0.063 zone that preceded 887% rally

Dogecoin is testing a support zone that preceded an 887% rally, raising the odds its prolonged decline is nearing exhaustion.

Dogecoin traded near $0.07 on Aug. 4, down 85% from its late-2024 peak near $0.48, as the memecoin approached a support zone that preceded an 887% rally.

The $0.048–$0.063 range served as a major accumulation zone between 2022 and early 2024, according to TradingView chart data. DOGE rebounded about 224% after testing the zone in June 2022, then rallied 887% toward $0.48 on its next visit.

The weekly relative strength index stood near 32.7 on Aug. 4 and could fall below the oversold threshold of 30 by the US mid-term election in November, when the retest may occur. An initial recovery could push DOGE toward its 20-week exponential moving average near $0.088, with a decisive break opening the $0.11–$0.12 resistance range.

A weekly close below $0.05 would invalidate the accumulation thesis and expose DOGE to deeper losses. The setup could fail if global liquidity tightens, with the Bank of Japan and Federal Reserve both pointing to potential September hikes.

BoJ, Fed Tightening Risks Yen Carry Trade Unwind

The Bank of Japan held its policy rate at 1 percent in July after raising it by 25 basis points in June, though the decision passed by an 8-1 vote with board member Hajime Takata backing an immediate increase to 1.25 percent. Japan's two-year government bond yield subsequently rose to 1.51 percent, while markets assigned roughly a 40 percent probability to a September hike, up from 20 percent a week earlier.

The Federal Reserve presents a second liquidity risk. CME FedWatch data showed the probability of a 25-basis-point September hike rising to about 62.5 percent, versus 55.8 percent one week earlier.

Simultaneous tightening could strengthen the yen and accelerate the unwinding of yen-funded carry trades. During the August 2024 unwind, Japan's Nikkei dropped nearly 20 percent, the S&P 500 lost more than 5 percent, and Bitcoin declined around 15 percent. The affected leveraged trades were estimated at roughly ¥40 trillion, or $250 billion. A similar deleveraging event would likely pressure DOGE despite its historical support setup.

The setup leaves DOGE at a crossroads: a confirmed hold of the accumulation zone could set up another macro rebound, while a break below $0.05 would open the door to deeper losses. For traders, the November mid-term election and the September central bank meetings are the key dates to watch.

This article is for informational purposes only and does not constitute investment advice.