Dogecoin (DOGE) Falls by 15% - What Could Happen Next?
Date: 2024-01-05 Author: Dima Zakharov Categories: BLOCKCHAIN
Dogecoin's Price Decline Despite Bullish Breakout
Dogecoin, the popular meme cryptocurrency, has been following a downward resistance trendline since April 2021, reaching its lowest point at $0.049 in June 2022. Despite several unsuccessful attempts at a bullish breakout (indicated by the red markers), the price finally breached this trendline in November 2023.
This breakthrough allowed DOGE to reach a high of $0.108 in December 2023, just below a crucial horizontal resistance level. However, since then, Dogecoin's price has been in a downward trend.
RSI Signals Potential Trend Shift
The weekly Relative Strength Index (RSI) has remained above the neutral level of 50, but over the past two weeks, it has declined, dropping below the 70-mark. This suggests a weakening trend momentum, indicating caution for traders.
DOGE Forecast: What Lies Ahead After Yesterday's Drop
On the daily chart, DOGE has been trading within a descending parallel channel since December 11th. Such patterns typically involve corrective movements. Despite the recent price drop below the channel's support line, DOGE formed a long lower wick, considered a buying pressure signal (green marker). This wick tested the $0.075 support level, Fibonacci level, and horizontal support area before returning within the channel.
However, the daily RSI has turned bearish, dropping below the 50-mark (red circle) for the first time since October (green circle). The future trend of DOGE will likely depend on whether it experiences a bearish breakout or a rebound from the current channel.
Possible Scenarios
A bearish breakout from the channel could trigger a 9% decline towards the support convergence area at $0.075. Conversely, a bullish breakout from the channel could drive a 25% increase towards the next resistance at $0.100. Investors and traders are eagerly watching these developments in the Dogecoin market.
