Dogecoin (DOGE) is currently in a consolidation phase following a significant downtrend, indicating that this cryptocurrency is navigating a crucial crossroads in its trading journey. Technical analysis by a cryptocurrency expert suggests that while a potential uptrend could be on the horizon for Dogecoin, traders should approach this situation with caution, particularly due to the possibility of a false breakout.
Dogecoin Price Rally Or False Breakout?
According to leading analysis from TradingView expert ‘EliteFxAcademy_CRYPTO,’ Dogecoin is currently consolidating between critical price zones, which could signify an impending breakout. After a pronounced price decline, Dogecoin has been trading within a confined range on the 4-hour chart, finding support around the $0.158 to $0.165 mark, effectively cushioning against further downward movement.
This analysis indicates that Dogecoin’s downturn has transitioned into a consolidation phase, suggesting that the cryptocurrency is stabilizing and potentially gearing up for an upward movement. The analyst also noted important resistance levels between $0.175 and $0.18—upper zones that could impede stronger upward momentum.
Until Dogecoin breaks through its resistance zones, price movements are expected to remain range-bound. Should it manage to exceed these resistance levels, it could signal potential growth for the meme coin. Conversely, a decline below key support levels could exacerbate the downward trend in Dogecoin’s already reduced price.
Historically, prolonged consolidation in the cryptocurrency market often precedes a strong rebound to the upside. If Dogecoin successfully overcomes its resistance levels, its price consolidation phase may close, indicating the resumption of its previous uptrend. Such a trend reversal might drive the cryptocurrency’s price towards a target range of $0.19 to $0.2 and beyond.
While this optimistic outlook has the potential to yield a robust rebound from Dogecoin’s current lows, analysts also caution about the risk of a false breakout. This scenario involves the price momentarily exceeding the resistance or support threshold before rapidly reversing. With recent tests of these zones, ensuring confirmation signals like significant trading volume or enduring price action beyond the defined range is vital for traders.
In a bearish scenario, the TradingView expert anticipates that Dogecoin could dip as low as $0.15, should it experience a significant decline below its support range. This would reflect an 11.24% decrease from its recent lows.
What’s Next For Dogecoin?
Currently, Dogecoin is trading at $0.169 after experiencing a more than 40% decline over the past month. While this downturn has unsettled the market, cryptocurrency analyst Ali Martinez expresses a bullish outlook for Dogecoin, estimating that the cryptocurrency is poised for a 16% price swing in the near future.
The analyst’s optimistic prognosis hinges on Dogecoin’s capability to breakout from its current Ascending Triangle chart pattern. If it can reclaim the ascending trendline and rise above $0.19, this could propel the price towards resistance, resulting in a successful breakout.
On the other hand, the charts also signify a critical phase where Dogecoin may descend below this trendline, indicating a potential bearish breakdown toward the $0.16 to $0.158 support zones.
Featured image from DALL-E, chart from TradingView
