Dogecoin’s price has been on a downward trend despite a recent bullish breakout. The popular meme coin, DOGE, had been following a descending resistance line since April 2021, hitting a low of $0.049 in June 2022. However, in November 2023, the price finally broke through this trend line, reaching a high of $0.108 in December 2023, just below a crucial horizontal resistance area. Since then, the price of Dogecoin has been declining.
Source: TradingView
Although the weekly Relative Strength Index (RSI) is still above the neutral level of 50, it has been decreasing over the past two weeks and fell below the 70 mark, indicating a weakening trend. This suggests a change in momentum from the recent high, so traders should exercise caution.
In terms of the daily chart, there is no clear trend direction. DOGE has been trading within a descending parallel channel since December 11, suggesting corrective movements. Despite yesterday’s decline, which caused the price to fall below the channel support line, DOGE formed a long lower wick, indicating buying pressure. The wick tested the $0.075 support level, Fibonacci level, and horizontal support area before DOGE returned to the channel.
However, the daily RSI is bearish, dropping below 50 for the first time since October. Therefore, whether DOGE experiences a bearish breakout or bounces back will determine its future trend.
Source: TradingView
If DOGE breaks out of the bearish channel, it could potentially lead to a 9% decline towards the $0.075 support confluence area. On the other hand, a bullish breakout from the channel could trigger a 25% rally towards the next resistance at $0.100.
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