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Dogecoin (DOGE) could be on the cusp of a significant price move that might ignite a powerful short squeeze, according to analyst Ali Martinez (@ali_charts). He pointed out on January 27, via X, that “$766.45 million in short positions will be liquidated if Dogecoin DOGE rebounds to $0.35,” implying that bearish traders stand on precariously thin ice. Massive Dogecoin Short Squeeze Incoming? A look at the up-to-date liquidation heatmap from Coinglass shows hefty short positions clustered between roughly $0.339755 and $0.34368. Coinglass data shows $464.8 million at $0.339755, $534.79 million at $0.34054, $503.97 million at $0.341325, $433.04 million at $0.34211, and $325.29 million at $0.34368, bringing the total to around $2.26 billion in potential forced liquidations. That figure underscores the magnitude of a possible short squeeze should DOGE climb above that tight range. Coinglass describes its heatmap as a way “to predict where liquidation levels are likely to initiate,” and has also underscored that “liquidations play a crucial role in the cryptocurrency market” because they can influence rapid price swings when traders with large leveraged positions are forced to close out. Related Reading: Ready To Rocket? Dogecoin Chart Hints At Major Gains Ahead Coinglass emphasizes the value of understanding “high liquidity areas,” since they can serve as magnet zones where big players, sometimes referred to as whales, seize the opportunity to execute sizable trades. Traders often jump on liquidation clusters at advantageous prices, which then paves the way for sharp reversals. In the case of Dogecoin, that magnet zone is now sitting just below $0.35. Martinez’s analysis of DOGE aligns with the broader technical picture, which suggests the token may be at a make-or-break juncture. Since December 8, when Dogecoin briefly surged to $0.4834, the price action has been defined by a descending trendline. Although DOGE broke above this line on January 15, 2025—indicating a potential bullish shift—broader market volatility on January 26 quickly dragged it back below. The result is a scenario in which the descending line, now around $0.335 to $0.34, stands as a formidable barrier. A successful breach of that zone could be pivotal, especially given the sheer concentration of shorts that Coinglass has identified just above it. Should DOGE rally enough to pierce that level, traders holding short positions may be forced to cover quickly, and that wave of buying pressure can rapidly accelerate an upward move. Related Reading: Think Dogecoin Has Topped Out? Two Factors That Say ‘No Way’ Meanwhile, DOGE remains above the crucial 0.382 Fibonacci retracement near $0.313, a support level that prevented further downside during the latest market sell-off. The next technical support lies deeper on the chart, near $0.212 (0.236 Fibonacci retracement), where traders will be watching closely for any sign of weakening momentum. On the upside, the 0.5 retracement at $0.394 remains a key pivot. A sustained recovery above that threshold might spark greater bullish confidence, with potential resistance emerging again around the 0.476 to 0.592 region if Dogecoin can regain enough force. Featured image created with DALL.E, chart from TradingView.com