The DOGE price has broken out from a long-term descending resistance line. However, the failure to initiate a significant price surge after the breakout is a worrisome sign for the future price outlook.
Additionally, the short-term movement is inconclusive. So, it is still possible that the breakout was illegitimate.
Dogecoin Price Struggles to Maintain Increase
The technical analysis from the weekly time frame reveals that the DOGE price had fallen under a descending resistance line since its all-time high price of $0.739 in May 2021. The decrease culminated with a low of $0.049 in June 2022.
The price bounced afterward but failed to break out from the resistance line. Rather, it was rejected first by combining the resistance line and $0.15 resistance area (red icon) and then by the resistance line alone (white icons).
On July 15, 2023, DOGE finally broke out from the resistance line. At the time, the line had been in place for 805 days. A similar movement transpired in the DOGE/BTC pair.
Even though breakouts from such long-term structures usually lead to significant price surges, this was not the case for DOGE. Rather, the price has hovered close to its breakout level since.
An increase to the next resistance at $0.150 will amount to an upward movement of 100%, while a drop to the $0.060 support area will decrease by 20%.
The examination of the weekly Relative Strength Index (RSI) reading does not produce a definite result. The RSI functions as a momentum indicator employed by traders to assess whether a market is excessively bought or sold, determining the appropriate timing for buying or selling an asset.
When the RSI reading goes beyond 50 and trends upward, it indicates a favorable bullish sentiment, whereas readings below 50 indicate the opposite. Over the past three weeks (green circle), the RSI has consistently stayed around 50. This is a sign of a neutral trend.
DOGE Price Prediction: Breakout or Breakdown?
Similarly to the weekly one, the daily timeframe technical analysis offers mixed signs.
On the bullish side, the DOGE price broke out from a 265-day descending resistance line on July 24. Afterward, it returned and validated as support on August 4 (green icon).
But, DOGE did not manage to bounce after breaking out. On the contrary, the price is in the process of breaking down from an ascending parallel channel pattern that has been in place since the June low.
The ascending parallel channel usually contains corrective movements. In the case of DOGE, the increase since the lows were corrective, and the trend is bearish. If so, the DOGE price will fall by 25% and reach the June low at $0.055.
In a similar fashion to the weekly RSI, the daily one is hovering just above the 50 line. Therefore, it fails to determine the future trend’s direction.
However, despite this bearish DOGE price prediction, a breakout from the channel will likely catalyze a long-term increase. In that case, the DOGE price can pump by 100% and reach the next long-term resistance at $0.150.
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