Last week, the Dogecoin (DOGE) price failed to break out from the resistance trend line of a corrective pattern.
The weekly and daily time frames give conflicting readings, making determining the trend’s direction difficult.
Dogecoin Bounces at Previous Resistance
The technical analysis from the weekly time frame shows that the DOGE price had fallen under a descending resistance trend line since October 2022. The decrease led to a low in June 2023. Dogecoin has increased since.
After creating a higher low in October, the Dogecoin price accelerated its rate of increase and broke out from the resistance trend line the next month. The trend line had stood for 400 days before the breakout.
Dogecoin reached a new yearly high of $0.107 on December 11 before falling.
When evaluating market conditions, traders use the RSI as a momentum indicator to determine whether a market is overbought or oversold and whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is upward, bulls still have an advantage, but if the reading is below 50, the opposite is true.The weekly RSI supports the bounce since it bounced at 50 while the price tested the resistance trend line.
Read More: How to Buy Dogecoin (DOGE)
DOGE Price Prediction: Can Price Reverse the Trend?
While the weekly time frame technical analysis shows a bullish retest, the daily chart leans bearish.
The daily time frame shows that the DOGE price has traded inside an ascending parallel channel since June 2023. After breaking out in December, the price retested its resistance trend line twice (green icons).
However, it did not show enough resilience as it regressed inside the channel at the start of 2024. On January 11, DOGE validated the channel’s resistance trend line (red icon) and fell.
Read More: Dogecoin – Should You Buy into the Hype?
Despite this bearish price action, cryptocurrency trader WorldOfCharts suggests the DOGE price will increase significantly soon. He tweeted:
Consolidating In Bullish Pennant Expecting Breakout Soon Successful Breakout Can Lead 45-50% Bullish Rally
Also, well-known Dogecoin enthusiast Elon Musk confirmed that he still owns Dogecoin. However, the daily RSI also gives a mixed reading. While the indicator is increasing, it is still below 50.
As a result, whether the DOGE price breaks out from the channel or below its midline will determine the future trend.
A breakout from the channel can initiate a 45% increase to the next resistance at $0.115. Conversely, a fall below its midline can lead to a 25% decrease in the support trend line at $0.062.
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