- A high liquidation zone for Dogecoin lies at $0.27, which could cause a short squeeze.
- If these positions are wiped out, the ensuing liquidations could aid a breakout from consolidation.
Dogecoin [DOGE]has been under bearish pressure after dropping by 20% in seven days. At press time, the largest memecoin was trading at $0.264, with a market capitalization of $39 billion.
Despite bears remaining in control, the volatility that rocked Dogecoin earlier this week is waning and forcing the memecoin into consolidation.
However, a liquidation cluster hovering above the current price could act as a magnet zone that will push DOGE higher.
Analyzing Dogecoin’s liquidation heatmap
Dogecoin’s liquidation heatmap with a 24-hour look back period shows a cluster of liquidations at $0.272.
If DOGE rises to this level, many short sellers will be at risk of liquidation.
Source: Coinglass
Short sellers close their positions by buying. If DOGE rallies and these positions are closed, it could ignite buying pressure that will stir a rally.
Moreover, the influx of long liquidations earlier this week cleared out liquidation clusters below price. Even if DOGE fails to attract fresh buying to surge to $0.27, the reduced liquidation risk of long positions could force it into consolidation.
At the same time, Funding Rates have flipped back to positive per Coinglass, indicating that long traders are willing to pay short traders to maintain their positions.
The rising demand for long positions indicates a bullish sentiment.
Can Dogecoin break from consolidation?
Dogecoin’s hourly chart shows that the memecoin has entered into consolidation. At press time, DOGE was attempting a breakout past the midline of the consolidation channel, albeit with low volumes.
For DOGE to break out of this channel, it needs to flip resistance at $0.272, which is also the short liquidation zone. Such a breakout could aid an uptrend.
Source: TradingView
The Relative Strength Index (RSI) indicator showed that buyers are slowly coming back into the market following its rise to 52. The RSI line is also trending above the signal line, suggesting that the short-term momentum is bullish.
Despite the rising RSI, the constricting Bolinger bands indicated that volatility remains low. As such, DOGE could continue trading within this consolidation channel until buying demand rises.
77% of traders are still long on DOGE
Data from Coinglass shows that 77% of traders on the Binance exchange have taken long positions on Dogecoin. On the other hand, only 22% of traders had opened short positions.
(Source: Coinglass)
Read Dogecoin’s [DOGE] Price Prediction 2025–2026
The demand for long positions indicates that traders are anticipating that a bullish breakout is likely.
It also shows that sentiment around DOGE remains bullish, and if buyers step in, it could aid a breakout from consolidation.
