Dogecoin (DOGE) is in a consolidation phase after experiencing a strong downtrend, indicating that the cryptocurrency is at a critical juncture. A crypto expert’s technical analysis suggests that while Dogecoin’s recent uptrend could continue, traders should remain cautious due to the threat of a false breakout.
Dogecoin Price Rally Or False Breakout?
According to TradingView crypto analyst, ‘EliteFxAcademy_CRYPTO,’ the Dogecoin price is currently consolidating between key zones, indicating that a potential breakout may be on the horizon. After witnessing a severe price decline, Dogecoin has been trading within a defined range on the 4-hour chart, with support levels around $0.158 – $0.165 situated around the lower zones to prevent further breakdowns.
The analysis revealed that Dogecoin’s downturn has transformed into a consolidation phase, where the cryptocurrency is stabilizing and possibly preparing for another leg up. Additionally, the TradingView expert shared critical resistance areas between $0.175 and $0.18, found in the upper zones, that serve as a barrier to limit stronger upward movement.
Until Dogecoin can break out of its resistance zone, its price is expected to remain range-bound. The analyst predicts that a break above resistance zones could potentially signal further growth in the meme coin’s price. Conversely, a drop below key support levels may fuel additional declines in Dogecoin’s already low price.
Historically, a prolonged consolidation in a cryptocurrency often precedes a strong rebound to the upside. If Dogecoin manages to surpass resistance levels, its price consolidation may end, signaling the continuation of its previous uptrend. This trend reversal is expected to push the cryptocurrency’s price toward the $0.19 -$0.2 target and above.
While this bullish outlook could yield a decisively strong move from Dogecoin’s current lows, the TradingView analyst warns of the possibility of a false breakout. This is a scenario where the price of a cryptocurrency momentarily breaches the resistance or support level before swiftly reversing. Since Dogecoin has tested these zones multiple times, the crypto expert has cautioned traders to look out for confirmation signals such as substantial volume or sustained price action beyond the range.
In an alternatively bearish scenario, the TradingView expert has predicted that Dogecoin could decline as low as $0.15 if it experiences a stronger decline below its support range. This would represent an 11.24% decline from recent lows.
What’s Next For Dogecoin?
The Dogecoin price is currently trading at $0.169 after recording a decline of over 40% in the past month. While this downturn has shaken the market, crypto analyst Ali Martinez shares a bullish outlook for Dogecoin, predicting that the cryptocurrency is gearing up for a 16% price swing soon.
The analyst’s optimistic forecast is contingent on Dogecoin’s ability to break out of its current Ascending Triangle chart pattern. If the cryptocurrency can reclaim the ascending trendline and bounce back above $0.19, it could push toward resistance and attempt a breakout.
Conversely, the chart highlights a critical zone where the Dogecoin price is dropping below the trendline, suggesting a possible bearish breakdown toward the $0.16 – $0.158 support zone.
Featured image from DALL-E, chart from TradingView
