The short-term dynamics of DOGE do not look convincing. A bullish breakout of resistance may prove false.
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Will Dogecoin be able to develop growth
The Dogecoin project token Dogecoin -one of the most recognizable “calling cards” of the crypto market-has many fans. It emerged in 2013 as a meme coin, but many already believe that DOGE has outgrown that status.
The technical analysis on the weekly chart shows that the price of DOGE has been declining along a descending resistance line since May 2021, since reaching an all-time high of $0.739. The price hit a low of $0.049 (green icon) in June 2022.
After that, DOGE started a recovery phase and traded above the $0.060 horizontal support level. After numerous unsuccessful attempts over the course of six months, on July 15 the token finally broke through the resistance line, which stayed on the chart for an impressive 805 days. The DOGE/BTC pair has seen similar movement.
Some speculate that this rise could be related to the recent rebranding of Twitter by Ilon Musk.
Breaks of such long-term patterns often lead to significant price gains as they signal the end of the previous trend. However, it is important to note that the expected growth has not yet occurred.
Source: TradingView
The weekly Relative Strength Index (RSI) values do not allow us to draw definite conclusions. This momentum indicator has been trading right around the 50 mark (green circle) for the past two weeks, reflecting a lack of clear directionality.
A vigorous bounce from this line would confirm a bullish trend reversal, while a decisive decline below it would indicate that the DOGE’s bullish breakout has failed.
A strong bounce from this line would confirm a bullish trend reversal, while a decisive decline below it would indicate that the DOGE’s bullish breakout has failed.
DOGE outlook: which way the trend is headed
Technical analysis of the shorter daily timeframe confirms a mixed forecast. The main reason for this is the contradictory price dynamics this year.
On the one hand, on July 24, DOGE made a breakout of the descending resistance line, which has existed on the chart for 265 days. However, the price was unable to build on the gains. Instead, on August 4 the token came back to test this line as support (green icon).
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This could be considered a normal post-breakout retest, but the move from the June lows occurred inside an ascending parallel channel. Such patterns usually have corrective movements, which means that the most likely scenario is a bearish exit.
If this happens, the coin will fall below this line, which will cancel the previous breakout. In that case, the most likely scenario would be a sharp 25% drop in the token back to the June lows at $0.055.
A bullish breakout from the channel would mean the token’s earlier long-term bullish breakout remains in place.
In the meantime, a bullish breakout from the channel would mean that the earlier long-term bullish breakout remains in place. This could trigger a price rise of 100% to the November 2022 highs. around $0.150.
The RSI index, meanwhile, is not giving any clear clues. It is above the 50 mark but is not showing a clear bullish trend. Rather, it is just treading just above this line, indicating a neutral sentiment.
Similarly, it is just treading just above this line, indicating a neutral sentiment.
Source: TradingView
So while the long-term trend on DOGE is bullish, the short-term trend is still undefined. A bearish breakout from the channel would mean that the trend remains bearish, while a breakout of its upper boundary would confirm a bullish reversal of the long-term trend and potentially lead to a 100% price rise.
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