Key Points:
- Breakout invalidation signals bearish sentiment.
- Importance of maintaining $0.060 support for potential rebound.
- Weekly RSI and parallel channel breach underscore downward pressure.
Last week witnessed a substantial 25% decline in the price of DOGE, casting doubts on the continuation of its previous breakout from a descending resistance line that had persisted over the long term.
The nullification of this breakout presents a potent bearish signal that might trigger further descent. To maintain the potential for a recovery, it is crucial for the DOGE price to maintain its position above the $0.060 mark.
Reversal of Fortune for Dogecoin Price as Breakout Fizzles
A technical analysis of the weekly timeframe reveals that the meme coin has been confined beneath a descending resistance line since its peak price of $0.739 in May 2021. This downward trajectory led DOGE to a low of $0.049 in June 2022, followed by a rebound (indicated by the green icon). This rebound validated the $0.060 region as a supportive zone.
In July 2023, there appeared to be a successful breakout from this resistance line (indicated by the green circle). However, this breakout proved to be short-lived. Rather than propelling an upward trajectory, Dogecoin’s price retreated beneath the line last week, retracing to the $0.060 support level.
Setting aside the failed breakout, the resistance line had persisted for a duration of 833 days. Tragically, sad news arrived yesterday as the beloved Dogecoin mascot “Balltze” lost the battle against Leukemia.
The subsequent significant resistance area lies at $0.150, indicating a substantial 140% surge from the current price. At the present value, acquiring millionaire status would necessitate holding 1,357,129 DOGE tokens, contingent on the price revisiting its historical pinnacle.
The weekly Relative Strength Index (RSI) is indicating a bearish stance. Traders commonly utilize the RSI as a momentum gauge to ascertain whether a market is in an overbought or oversold state, guiding decisions to buy or sell assets.
A reading above 50 on the RSI, combined with an upward trend, denotes an advantageous position for the bulls. Conversely, a reading below 50 indicates the opposite.
Although the indicator briefly breached the 50 threshold during the breakout period (as indicated by the red circle), it has since dipped beneath this threshold. This signals a bearish trajectory and underscores the inauthentic nature of the breakout.
Can Bullish Patterns Rescue Dogecoin’s Trajectory?
Analogous to the weekly outlook, the daily perspective paints a bearish price forecast. This is primarily due to DOGE’s exit from an ascending parallel channel on August 15 (depicted by the red icon).
The channel breach indicates that the prior uptrend was corrective, ushering in a downward phase. This decline was rapid, causing DOGE’s value to plummet by 25% within a mere three-day span.
Currently, DOGE’s price is trading above the horizontal support region at $0.060. There’s a possibility that it has formed a double bottom pattern in relation to June’s pricing. While this pattern is generally seen as bullish, other corroborative bullish reversal signals are absent.
Despite the increasing RSI, it remains below 50, indicating an undecided trend.
Consequently, the forthcoming DOGE price trajectory hinges on whether it breaks below $0.060 or stages a resurgence from the resistance line. Should a breakout transpire, a substantial 140% surge towards the $0.15 resistance level could be anticipated.
Conversely, a breakdown might lead to a steep 42% descent, targeting $0.036.
