Dogecoin forms rounding bottom on the daily chart, what happens next?

Dogecoin forms rounding bottom on the daily chart, what happens next?


As sentiment flips risk-on against expectation, crypto markets are enjoying a period of buoyant activity. Cardano leads the large caps, up 31% over the past week. But somewhat surprisingly, Dogecoin follows, having gained 16% over the same period.

$DOGE has been trending downwards following May 2021’s peak of $0.76. The price hit a local bottom on February 24, 2022, marking a peak to trough move played out over ten months with a -87% swing to the downside.

The loyal Dogecoin community has continued to meme away their misery throughout this time. However, with the technicals signaling a reversal, is their patience about to be rewarded?

Dogecoin analysis

Dogecoin has closed the last three consecutive daily candles in the green, with Thursday on track to do the same. Wednesday saw a touch of the 50-day moving average line before dipping back down to close the day slightly below.

Dogecoin daily chart
Source: DOGEUSD on

Today sees a moderate break of the 50-day moving average line, as $DOGE posts 5% gains at the time of writing.

The Relative Strength Index (RSI) shows a sharp uptick since Monday, having moved from 44 to 63, indicating strong buyer momentum. However, RSI resistance is found at the 66 level, established on January 14 as $DOGE touched $0.22.

Interestingly, further analysis shows the price chart is forming a rounding bottom. Typically, this pattern indicates a positive reversal in sentiment and the end of a protracted downtrend.

β€œRounding bottoms are found at the end of extended downward trends and signify a reversal in long-term price movements.”

Once the move completes, a breakout usually follows and should continue in a new upward trend.

Dogecoin now available at crypto ATMs

Technical analyst CryptoSoap expects price action to develop into an inverse head and shoulders. A break of the falling wedge will see a bullish retest of the wedge line before moving higher.

The prediction was justified based on low volume, which is interpreted as a lack of sell pressure.

Dogecoin TA
Source: DOGEUSD on

Recent times have seen the narrative turn away from meme coins. However, Dogecoin is attempting to redefine itself as a (serious) payment token.

Supporting this undertaking, Coinflip, this month, announced it is adding Dogecoin to its network of 1,800 ATMs. Coinflip co-founder Daniel Polotsky said $DOGE is growing in popularity, and his firm is committed to supporting the project.

β€œGiven its growing popularity and recent mass adoption, we are dedicated to making sure that Dogecoin is a part of our portfolio of coins, and encourage further support of this cryptocurrency in the coming months.”

While the signs point to a trend reversal, traders should proceed with one eye on Bitcoin and the macro landscape.

Posted In: Dogecoin, Analysis

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