Since breaking 208% in early November, Dogecoin (DOGE) has been consolidating within a narrow range between $0.35 and $0.48 for four weeks. DOGE’s recent price correction resulted in a breakout below the uptrend line, indicating a potential bearish trend change.
Dogecoin 1 day chart. Source: Cointelegraph/TradingView
However, one analyst pointed out that Dogecoin could face another upward trend based on key technical indicators and recurring setups starting in March 2024.
Dogecoin Uptrend Could Happen “At Any Time”
Despite this week’s 16% decline, cryptocurrency pattern analyst Trader Tardigrade noted that a strong overbought signal on Dogecoin’s daily RSI has been reset.
Overbought conditions in the Relative Strength Index (RSI) indicate the possibility of traders selling cryptocurrency assets, which could lead to a short-term decline in value.
Dogecoin analysis by Trader Tardigrade. Source: X.com
Previously, a strong upward trend was observed on the daily chart in March 2024, when the overbought condition on RSI was ‘relaxed’ to 50. Based on the charts, the analyst hinted that a break above $0.50 could occur “at any time” over the next few days.
Average dollar investment age for DOGE, BTC, and XRP. Source: X.com
Data from data analytics platform Santiment also noted that DOGE’s “average dollar investment age” is sending bullish signals. The average investment age for cryptocurrency assets has fallen by 31% in eight weeks, indicating that dormant coins are coming back into circulation. The platform mentioned in the X post regarding bullish momentum is:
“The 2017 and 2021 bull markets similarly did not stop until the average age of assets began to ‘rise’ (age) again.”
Related: Most altcoins could see ‘slow bleeding’ until the end of January 2025: VC
DOGE could see a liquidity swipe between $0.32 and $0.34.
While the long-term trend remains bullish, Dogecoin may fall to gather liquidity between $0.32 and $0.34 before showing higher value. As observed, DOGE’s recent low of $0.365 fell on November 26, but additional liquidity lows remain around $0.34 and $0.32.
A similar bullish breakout in March 2024 saw liquidity lows near $0.12 and $0.10, which DOGE then retraced before continuing the trend.
We analyzed the Dogecoin 1-day charts side by side. Source: Cointelegraph/TradingView
An important observation is that the RSI has eased back to 50 over the same period of time that the 50-day EMA is being tested (see figure above). Other similar confluences include a daily bearish burrowing pattern and a breakout of the rising trendline below, supporting strong similarities between past and present setups.
Therefore, we may retest the 50-day EMA before the next bullish zone moves higher and drops to $0.34 and $0.32.
Related: Cryptocurrency ‘Buy the Dip’ Moment Will Last Longer This Cycle: Hedge Fund Founder
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.