The Dogecoin (DOGE) price breaks below 120-day support area
Even though the DOGE price has broken down from a 120-day horizontal support area on October 9, it is still trading within a longer-term horizontal support level.
Dogecoin falls below 120-day support area
On the daily timeframe, the technical analysis reveals that DOGE has been trading above the $0.060 horizontal support area since June 10. Additionally, it has been under a descending resistance trendline since July 25, forming a descending triangle pattern, which is considered bearish.
The recent volatility in Dogecoin caused a breakdown from the support area, resulting in a low of $0.057, the lowest price since August 17. The price has slightly bounced back but has not reached the $0.060 area yet.
The daily Relative Strength Index (RSI) is bearish, indicating a downward trend. The RSI reading is below 50 and falling, signaling a bearish trend. Moreover, it broke down from its bullish divergence trendline.
DOGE price prediction: Where to next after breakdown?
Looking at the weekly timeframe, there are two reasons for a bearish outlook. Firstly, DOGE is trading within a larger descending triangle pattern with a base at $0.057. A breakdown that reaches the entire height of the triangle would take DOGE to $0.020, a 67% decrease from the current price.
The 1.27 Fib extension also supports this area as a potential bottom since it falls at $0.020. Fibonacci retracement levels theory suggests that after a significant price change in one direction, the price is likely to partially return to a previous level before continuing in the same direction.
Despite the bearish prediction, if DOGE experiences a strong bounce at the long-term horizontal support area of $0.057, it could lead to a 20% increase towards the long-term descending resistance trendline, currently at $0.070.
Hot Take: Dogecoin faces bearish outlook as it falls below support
Dogecoin’s recent breakdown from the 120-day support area and the formation of a descending triangle pattern indicate a bearish trend. The daily and weekly RSI readings are below 50 and falling, further supporting the bearish outlook. However, if DOGE manages to bounce back from the long-term support area, there is a possibility of a short-term bullish move towards the descending resistance trendline. Traders and investors should closely monitor the price action and key support levels to make informed decisions.
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