Key Insights:
- Dogecoin broke below its long-standing ascending parallel channel, signaling a potential bearish trend.
- The 0.618 Fibonacci retracement level at $0.06167 is a key support for DOGE.
- A bullish divergence on the RSI suggests a possible price reversal despite bearish momentum.
Dogecoin price experienced a severe decline when it moved past its established ascending parallel channel that regulated its value direction since 2018. The technical change has created uncertainty about the direction among traders and market analysts.
Dogecoin Price Broke Below an Ascending Parallel Channel
Notably, Dogecoin price experienced a major drop when it broke through an essential ascending parallel channel that formed in 2018. Dogecoin previously benefited from this channel, which served as its guiding mechanism during bullish price periods. The breach is pointing toward a bearish market, indicating the meme coin might experience a downward price movement.
According to crypto analyst, Ali Martinez, the channel breakdown indicates that Dogecoin may experience more downward pressure through the next short-term period. The breakdown of this essential support trendline has created worries about DOGE future stability.
In addition, the cryptocurrency encountered resistance at its 0.786 Fibonacci retracement level at approximately $0.16395. The analyst expects Dogecoin to drop further in upcoming weeks because of recent price movements that have strengthened the bearish market outlook.
Besides, the declining trendline support is made more challenging due to shifts seen among Dogecoin whales. A massive transfer of 300 million Dogecoin from an unknown entity to Binance exchange introduced new market uncertainties. A major whale-selling movement could generate more price pressure, shifting it to key support levels.
Support for DOGE at 0.618 Fibonacci retracement
More so, the 0.618 Fibonacci retracement level at $0.06167 functions as a significant support point for Dogecoin. Historically, this level served as a consolidation area hence, it can establish the future trajectory for this cryptocurrency. Dogecoin may likely keep falling if it breaks below its crucial support point at $0.06167 and potentially drop as low as $0.060.
Technical analysts heavily depend on Fibonacci retracements because these tools help them locate essential areas of support and resistance. Traders view the 0.618 retracement level as an essential spot for market entry and exit actions.
Hence, the upcoming support level has Dogecoin traders actively assessing whether the cryptocurrency will maintain its position or fall short. A breach of this level might activate more selling pressure that could lengthen the current bear market period.
Possible Dogecoin Price Reversal: A Bullish Divergence on the RSI
Conversely, market analyst Trader Tardigrade has suggested Dogecoin might be about to break its prolonged bearish trend. The Relative Strength Index (RSI) shows a bullish divergence that helps measure price movement intensity. The RSI shows weakening selling pressure through higher lows, while the crypto price posts lower lows in this trend pattern.
Moreover, the weakening selling pressure is apparent during bullish divergences that could drive prices to reverse. This pattern suggests Dogecoin’s current asset depreciation might weaken, leading to potential market recovery. The meme coin stands to potentially reverse its downtrend if its price breaks above the 0.618 Fibonacci support level.
Meanwhile, a recent analysis indicated that Dogecoin price has the potential to experience a major price increase to $1. However, Ali Martinez pointed to $0.16 as an essential threshold for Dogecoin to maintain stability. The failure of Dogecoin to stay above $0.16 support may trigger a rapid decrease toward $0.06. Dogecoin future success in the short term will depend heavily on how well it keeps its vital support levels and prevents further price drops.
At the time of writing, Dogecoin price is trading at $0.1508, reflecting a 9% increase from the previous close. The day’s trading range has seen a high of $0.1531 and a low of $0.1374.
Disclaimer
This article is for informational purposes only. Crypto investment involves inherent risks due to the volatility in price. Readers should conduct their research before making any investment decision. Also, you can consult a crypto expert before investing in cryptocurrencies.
