The short-term move before the eventual breakout is still inconclusive.
Dogecoin (DOGE) price could soon break out of a long-term descending resistance line. However, the short-term move before the eventual breakout is still inconclusive.
DOGE price has been falling below a descending resistance line since reaching an all-time high price of $0.739 in May 2021. So far, the downward movement has led to a low of $0.049 in June 2022.
Initially, it looked like the drop triggered a breakdown below the $0.056 horizontal support area. However, the price bounced back and created a long wick to the downside, validating the area as support (green circle).
So far, the line has been validated five times (red icons), increasing its legitimacy. Due to the high number of touches and the long time the line has been active, a break above it would likely trigger an acceleration of Dogecoin’s upward price movement. It is worth noting that the resistance line is only visible on the logarithmic chart.
The weekly RSI reading supports the possibility of a breakout. The indicator has been generating a bullish divergence (green line) since the beginning of June. The trend line of the divergence remains intact.
For these reasons, a DOGE price breakout seems likely. If one occurs, the price of Dogecoin could quickly rise toward the nearest resistance level at $0.16.
Dogecoin Price Consolidates at $0.06
Despite DOGE’s bullish price prediction on the weekly time frame, the technical analysis readings for the shorter time frames are still unclear.
The daily time frame confirms the legitimacy of the $0.06 area. With the exception of two deviations, the area has acted as support since June 15. Currently, the DOGE price is trading within the area. Therefore, it is unclear whether the area acts as support or resistance.
Also, the daily RSI is moving freely above and below line 50. This could be a sign of an indeterminate trend and lines up with price action.
Finally, the two-hour chart shows that Dogecoin price is trading inside a symmetrical triangle. The symmetrical triangle is considered a neutral pattern, which fits perfectly with the inconclusive price action and technical indicator readings.
As a result, whether DOGE price rises or falls out of the triangle will likely determine the direction of the short-term trend.
Long-Term Uptrend, Short-Term Unfinished
To conclude, the long-term Dogecoin price forecast is bullish due to the bullish divergence on the weekly RSI and the multiple attempts to break the long-term resistance line. As a result of these readings, an eventual break in the line is expected.
However, the direction of the movement in the short term is not yet determined. A weekly closing price below $0.06 would invalidate the bullish assumption and indicate that new lows are expected instead.
An analysis of the long/short ratio showed a slight advantage for sellers in the last 12 hours. Buyers, in turn, should closely monitor funding rate movements, along with the long/short ratio to gauge overall sentiment.
Finally, the dog-themed coin shared a 61% 30-day correlation with the king coin. Therefore, keeping an eye on the movement of Bitcoin would complement these technical factors.
By Audy Castaneda
