Dogecoin (DOGE) is aiming for $0.15. Is a bullish breakout imminent?
Date: 2023-08-08 Author: Karina Ziganova Categories: BLOCKCHAIN
DOGE price has broken through a significant long-term resistance area, but is yet to confirm a bullish trend reversal, consolidating gains
Moreover, the daily timeframe does not confirm the start of a bullish trend reversal as the DOGE price is trading in a corrective pattern.
Dogecoin consolidates above long-term resistance
The coin of the Dogecoin project is one of the most recognizable “calling cards” of the crypto market and has many fans. Although it appeared in 2013 as a meme coin, many already believe that DOGE has outgrown the status of a mere meme.
As the weekly chart technical analysis shows, the price of DOGE has been declining along a descending resistance line since May 2021, when it hit an all-time high of $0.739. This decline resulted in a June 2022 low at $0.049 (green badge).
After that, DOGE experienced a recovery phase and started trading above the $0.060 horizontal support level. After several unsuccessful attempts over the course of six months, on July 15, the price nevertheless broke through the resistance line, which lasted an impressive 805 days on the chart. A similar movement is observed in the DOGE/BTC pair.
Some have speculated that this growth may have been due to Elon Musk's recent rebranding of Twitter.
Breakouts of such long-term patterns often lead to a significant increase in price, as they signal the end of the previous trend. However, it is important to note that the expected growth has not happened yet.
The readings of the weekly Relative Strength Index (RSI) do not make it possible to draw definite conclusions. This momentum indicator has been trading directly around the 50 mark (green circle) over the past two weeks, reflecting a lack of clear direction.
A vigorous bounce off this line would confirm a bullish trend reversal, while a decisive decline below it would mean that the DOGE bullish breakout has failed.
DOGE Forecast: Will the Bullish Trend Reversal Be Confirmed?
Technical analysis of the daily timeframe gives an ambiguous forecast. The main reason for this is the conflicting price dynamics this year.
On the one hand, DOGE made a bullish breakout of the descending resistance line on July 24th. Before the breakout, this line existed on the chart for 265 days. However, the price failed to consolidate the upward movement. Instead, on August 4, the token returned to test this line for strength as support (green icon).
This could be considered a normal retest after a breakout, but the move from the June lows was within an ascending parallel channel. In such patterns, corrective movements usually occur, which means that the most likely scenario for the development of events is a bearish exit from it.
If this happens, then the coin will fall below this line, making the previous breakout invalid. In this case, the most likely scenario for further developments will be a sharp fall of the token by 25% to the June lows at $0.055.
On the other hand, a bullish breakout from the channel would mean that the long-term bullish breakout remains active and could push the price up 100% to the November 2022 highs around $0.15.
The RSI, meanwhile, is above the 50 mark, but does not show a bullish trend. Rather, it just tramples a little above this line, indicating a neutral trend.
Thus, while the long-term DOGE trend is bullish, the short-term trend has not yet been determined.
A bearish breakout from the channel would mean that the trend remains bearish, while a breakout of its upper boundary would confirm a bullish reversal of the long-term trend and could lead to a 100% price increase.
