Dogecoin Shows Weakness Before Fed Interest Rate Decision
Dogecoin (DOGE) is trading just above $0.2650 on Wednesday. The coin has dropped over 13% from last week’s high. This decline tests the confidence of both holders and traders.
The United States Federal Reserve (Fed) will announce its interest rate decision later on Wednesday. Many expect the Fed to cut rates by 25 basis points. This move could encourage more investment in riskier assets like cryptocurrencies and stocks.
The CME Group’s FedWatch tool shows a 96% chance of a 25 basis point cut. Lower interest rates often lead to higher demand for assets like Dogecoin. This could increase investor interest in the crypto market in the coming months.
Futures Open Interest Signals Market Sentiment
Dogecoin’s futures Open Interest (OI) remains high at around $5.4 billion on Wednesday. This is down slightly from $6 billion on Sunday. Open Interest measures the total value of outstanding futures contracts.
A continued drop in OI may signal growing bearish sentiment. However, if OI rises again, it could show renewed optimism. Traders betting on Dogecoin rising above $0.3000 would support a bullish outlook.
Technical Analysis: Key Support Levels for Dogecoin
Dogecoin’s price is holding just above the 50-period Exponential Moving Average (EMA) at $0.2621 on the 4-hour chart. The Relative Strength Index (RSI) is at 47, indicating bearish momentum.
The SuperTrend indicator shows a sell signal since Monday. This suggests resistance above the current price. Investors may consider reducing exposure while these signals remain bearish.
If Dogecoin falls below the 50-period EMA, the next supports are the 100-period EMA at $0.2500 and the 200-period EMA at $0.2382. These levels could limit further losses before reaching the critical $0.2000 mark.
A positive Fed decision could help Dogecoin bounce from the 50-period EMA. This might push the price above the $0.3000 resistance tested last Saturday.
