In addition, the short-term picture for DOGE also looks blurry and uncertain. Thus, the possibility remains that the bullish breakout was illegitimate.
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Dogecoin fails to build on its growth
The Dogecoin project token -one of the crypto market’s most recognizable “calling cards”-has many fans. It emerged in 2013 as a meme coin, but many already believe that DOGE has outgrown that status.
According to technical analysis of the weekly chart, the price reached an all-time high of $0.739 in May 2021 and since then, the price of DOGE has been declining along a line of downward resistance. This decline culminated at a low of $0.049, reached in June 2022.
The decline has been a major factor in the decline.
After that, the price made a rebound but failed to break the resistance line. Instead, it bounced first from the area where that line converged with the $0.15 resistance area (red icon), and then again from the resistance line alone (white icons).
On July 15, 2023, DOGE finally made a breakout of the resistance line, which was 805 days old at the time. A similar movement occurred in the DOGE/BTC pair.
Although bullish breakouts of such long-term structures usually lead to significant price jumps, this was not the case with DOGE. On the contrary, price has held near the breakout level ever since.
A move in price to the next resistance at $0.150 would imply a rise of 100%, while a fall to the $0.060 support area would result in a decline of 20%.
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Source: TradingView
Meanwhile, the weekly relative strength index (RSI) signals are mixed. This momentum indicator has held steady around the 50 mark for the past three weeks (green circle). This is indicative of a neutral trend.
DOGE outlook: bullish or bearish breakout?
Like the weekly chart, the daily timeframe is showing mixed signs. On the one hand, on July 24, the token broke through a 265-day line of downward resistance. Price then came back and confirmed this level as support (green icon) on August 4.
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But there was no convincing rebound after the breakout. On the contrary, DOGE is now in the process of a bearish breakout from the ascending parallel channel that formed after the market set the June low.
A rising parallel channel usually accompanies corrective moves. In the case of DOGE, the rise from the lows was corrective amid a bearish trend. If so, the price will fall 25 percent further to a June low of $0.055.
And if so, the price will fall 25 percent to a June low of $0.055.
Analogous to the weekly RSI, the daily index is just above the 50 mark. Accordingly, it cannot send a clear signal about the direction of the future trend either.
Source: TradingView
Despite the bearish outlook, however, a bullish breakout from the channel is likely to be the catalyst for DOGE’s long-term growth. In that case, the price could rise 100% and reach the next long-term resistance at $0.150.