DOGE broke out of the long-term downward resistance line. However, failure to trigger meaningful growth after a breakout is a worrying sign.
In addition, the short-term picture for DOGE also looks blurry and uncertain. Thus, the possibility remains that the bullish breakout was illegitimate.
Dogecoin fails to grow
The Dogecoin project token is one of the most recognizable “calling cards” of the crypto market and has many fans. It appeared in 2013 as a meme coin, but many already believe that DOGE has outgrown this status.
As the results of a technical analysis of the weekly chart show, in May 2021 the price reached a historical high at $0.739 and since then the DOGE price has been declining along the descending resistance line. This decline culminated in the June 2022 low of $0.049.
After this, the price rebounded, but was unable to break through the resistance line. Instead, it bounced first from the area where this line converged with the $0.15 resistance area (red icon), and then again from the resistance line alone (white icons).
On July 15, 2023, DOGE finally broke through the resistance line, which at that time was 805 days old. A similar movement occurred in the DOGE/BTC pair.
While bullish breakouts of such long-term structures typically result in significant price hikes, this was not the case with DOGE. On the contrary, since then the price has remained close to the breakout level.
A price move to the next resistance at $0.150 would represent a 100% increase, while a fall to the $0.060 support area would result in a 20% decline.
Meanwhile, signals from the weekly relative strength index (RSI) are mixed. This momentum indicator (green circle) has remained steadily around 50 for the past three weeks. This indicates a neutral trend.
DOGE Forecast: Bullish or Bearish Breakout?
Like the weekly chart, the daily timeframe is showing mixed signs. On the one hand, on July 24, the token broke through the 265-day downward resistance line. After this, the price returned and on August 4 confirmed this level as support (green icon).
However, there was no convincing rebound after the breakout. In contrast, DOGE is now in the process of a bearish breakout from an ascending parallel channel that formed after the market set the June low.
An ascending parallel channel usually accompanies corrective movements. In the case of DOGE, the growth from the lows was corrective against the backdrop of a bearish trend. If this is so, then the price will then fall by 25% and reach the June low at $0.055.
Similar to the weekly RSI, the daily index is just above 50. Accordingly, it too cannot send a clear signal about the direction of the future trend.
However, despite the bearish outlook, a bullish breakout from the channel will most likely become a catalyst for DOGE's long-term growth. In this case, the price could rise by 100% and reach the next long-term resistance at $0.150.$DOGE
