Will Dogecoin (DOGE) price drop again?
The price of Dogecoin (DOGE) rose sharply on January 20th but fell sharply the next day.
DOGE has been trading in the support area of a bearish pattern in place for nearly two months. Can it reverse the trend or will Dogecoin collapse?
Dogecoin suffers from rejection
Daily timeframe technical analysis shows that DOGE price has been trading in an upward parallel channel since June 2023.
In December, the price broke out of the channel, reaching a high of $0.108. However, Dogecoin has since declined, falling within the channel limits on January 3, 2024.
Since then, it has made two failed breakaway attempts (red icons), leaving the top wits in place. The second rejection came shortly after Elon Musk introduced the “X Payments” account on the platform.
The daily Relative Strength Index (RSI) gives a boring reading. RSI is a momentum indicator that traders use to determine whether the market is overbought or oversold.
A reading above 50 and an upward trend indicates that the bulls are still in advantage, while a reading below 50 indicates the opposite. RSI is below 50 and falling (red circle), both signs of a bearish trend.
Read more: Dogecoin vs. Bitcoin: The Ultimate Comparison
DOGE Price Prediction: What to do with a Bear Pattern?
Like the daily time frame, the six-hour watch also offers a watch. This is due to DOGE price action and RSI readings.
The price action shows that since the December 2023 high mentioned above, Dogecoin has declined along the descending resistance trend line. Recently, the trend line declined on January 21, 2024 (red icon).
Read more: How to buy Dogecoin (DOGE) anonymously
The resistance trendline, when combined with the horizontal area of $0.077, forms a descending triangle that is considered a bearish pattern.
As the six-hour RSI is below 50 and falling (red circle), it supports bearishness. A breakdown that travels the entire height of the pattern will result in a 27% decline for Dogecoin, taking the price to the nearest support of $0.058.
Despite this bearish DOGE price forecast, a breakout from the short-term bearish resistance trendline will result in a 14% rise to the nearest resistance at $0.088.
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Disclaimer
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