As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of market cycles and trends, and I must say that Dogecoin’s recent price action has piqued my interest. After observing the 208% breakout in early November and subsequent consolidation within a tight range, I initially suspected a potential bearish trend shift. However, upon closer inspection of key technical indicators and repetitive market setups from March 2024, I find myself leaning towards a bullish outlook for Dogecoin.
Following a significant surge of 208% in early November, Dogecoin (DOGE) has been confined within a narrow band spanning between $0.35 and $0.48 for about four weeks. The recent price decline in DOGE has triggered a break below an upward trendline, which could suggest a possible shift towards a bearish market condition.
However, one analyst pointed out that Dogecoin could be on the brink of another uptrend based on a key technical indicator and repetitive setup from March 2024.
Dogecoin uptrend could happen “any time”
Despite a 16% decline this week, Trader Tardigrade, a crypto pattern analyst, pointed out that Dogecoin’s strong overbought signal of the daily RSI has been reset.
A high reading on the Relative Strength Index (RSI) suggests that the crypto asset may be overbought, potentially leading to traders deciding to sell it, which could result in a temporary drop in its value.
In March 2024, when the Relative Strength Index (RSI) no longer indicated an overbought condition (specifically, it dropped to 50), a significant upward trend became apparent on its daily chart. The analyst suggested that a breakout above $0.50 could occur imminently, given the chart’s current state.
According to Santiment, a data analysis tool, the average dollar invested time (ADIT) for Dogecoin is showing a positive trend. Over the past eight weeks, the ADIT has dropped by 31%, suggesting that previously inactive coins are re-entering circulation. This could be interpreted as a bullish sign regarding the crypto asset’s momentum, as mentioned in a recent post on their platform.
“The 2017 and 2021 bull markets similarly did not come to a halt until assets’ mean ages started going “up” (getting older) again.”
DOGE could see a liquidity swipe between $0.32 to $0.34
Although the overall outlook is positive for Dogecoin, it may experience a temporary dip in value between approximately $0.32 and $0.34. This drop is expected to help accumulate more liquidity within the market. It’s important to note that the price recently dipped to around $0.365 on November 26, but further potential low points could be found at levels of $0.34 and $0.32.
By March 2024, a comparable surge in optimistic sentiment led to periods of minimal supply around $0.12 and $0.10. Following this, Dogecoin temporarily reversed direction before resuming its upward trend.
The significant point to note is that the RSI returned to 50 at the same period (as shown in the graph), coinciding with the test of the 50-day Exponential Moving Average. Remarkably, other such alignments include the daily bearish engulfing pattern and a downward break of an ascending trendline, both suggesting a striking resemblance between the past and current configurations.
Therefore, a repeat test of the 50-day Exponential Moving Average (EMA) might happen, potentially causing it to fall to around $0.34 and $0.32, prior to another bullish rise.
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2024-12-12 01:47