Since December 6, Dogecoin’s (DOGE) price has been confined within a descending parallel channel pattern. While the daily time frame RSI is inconclusive, indications from the price action suggest an imminent breakout. Nonetheless, a failure to escape the channel could prompt a downturn.
The current DOGE price, though steadily declining since its annual peak on December 11, still holds a position above its early December levels. The question looms: Will the final week of the month bring a bullish turn? Notably, DOGE had been trapped under a long-term descending resistance trend line since April 2021, with a low point of $0.049 recorded in June 2022.
After multiple unsuccessful breakout attempts, the price finally breached the trend line in November 2023, leading to a new yearly high of $0.108 in December, just below a crucial horizontal resistance zone. However, the subsequent weeks witnessed a retreat from the peak.
Utilizing the RSI as a momentum indicator, traders can assess whether the market is in an overbought or oversold state, guiding decisions on asset accumulation or sale. An RSI reading above 50 and an upward trend favour bulls, while a reading below 50 signals the opposite.
Dogecoin (DOGE) Signals Potential Breakout
The weekly RSI, though above 50, has experienced a recent decline, slipping below 70, indicating a weakening trend. The price action suggests a bullish inclination despite ongoing ambiguity in the daily time frame.
Since achieving the yearly high, DOGE has navigated within a descending parallel channel, typically containing corrective movements and hinting at an imminent breakout. A significant bounce occurred at the channel’s support trend line and the $0.087 horizontal support on December 18, creating a noticeable long lower wick. Presently, Dogecoin is making efforts to break free from the channel.
Ali Martinez highlighted a continuous uptick in new Dogecoin addresses, signalling increased network activity and holding promise for DOGE’s future.
— Ali (@ali_charts) December 23, 2023
However, with the daily RSI in flux, hovering just above 50 but down from early December, the scenario remains uncertain. Nevertheless, a breakout remains the most plausible outcome, potentially driving a remarkable 11% surge to the next resistance level at $0.105.
In contrast, should a breakout fail to materialize, the risk of an 8% decline looms, with the nearest support standing at $0.087.