dog coin (DOGE) price broke out of a short term bullish pattern. It is currently trying to retest the $0.074 resistance area. The upward movement was preceded by positive Dogecoin news.
DOGE is the largest Internet meme coin based on its market cap. For a long time, there was no news of Dogecoin regarding the development of the platform, and the only notable news were tweets from Elon Musk that mentioned the coin in some form or the other.
However, on 31 December, The Dogecoin Foundation announced Dogecoin Corefund. Foundation Says It Will Allocate Five Million DOGE To Improve Dogecoin Core, Official purse maintained by the foundation. The wallet is vital to the Dogecoin community and ecosystem. The price of DOGE has responded positively since the announcement, gaining over 6%.
dogecoin price broke
Dogecoin price was trading within a descending wedge since November 9th. The wedge is considered a bullish pattern, meaning it leads to a breakout most of the time.
On December 30 and 31, the DOGE price appeared to break above the wedge (red circle). However, it was a failed breakdown, as the price retested the support line during the next 24 hours and then broke out of the descending wedge. It is possible that the said positive Dogecoin news may have aided the rise.
Furthermore, the breakout was preceded by a bullish divergence in the six hours RSI (green line), which often precedes an upward move.
If the rise continues, the nearest resistance area will be between $0.089-$0.084, formed by the 0.5-0.618 Fib retracement resistance levels.
Dogecoin is not out of trouble yet
Despite the bullish outlook on the shorter-term six-hour time frame, the daily lower is bullish. The main reason for the hit is that the price is still trading below the $0.074 horizontal resistance area. This is an important area as it previously acted as a support since early November.
However, the daily RSI has generated a significant amount of bullish divergence despite it failing to retest this area. Such divergence often precedes an upward move. Furthermore, the indicator has broken above a descending resistance line (black), supporting the possibility that the price will do the same.
If there is a rejection, the long-term ascending support line at $0.06 could provide a bounce if DOGE price reaches it once again.
To conclude, while there are bullish Dogecoin price signals on both the daily and six-hour time frames, price action is yet to turn bullish due to a failure to recapture the $0.074 resistance area. Until this happens, the long-term trend cannot be considered bullish.
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