After a 208% breakout in early November, Dogecoin (DOGE) has consolidated within a tight range between $0.35 and $0.48 for four weeks. DOGE’s recent price correction led to a breakout below an ascending trendline, indicating a potential bearish trend shift.
Dogecoin 1-day chart. Source: Cointelegraph/TradingView
However, one analyst pointed out that Dogecoin could be on the brink of another uptrend based on a key technical indicator and repetitive setup from March 2024.
Dogecoin uptrend could happen “any time”
Despite a 16% decline this week, Trader Tardigrade, a crypto pattern analyst, pointed out that Dogecoin’s strong overbought signal of the daily RSI has been reset.
An overbought condition on the relative strength index (RSI) indicates the possibility of traders selling the crypto asset, which can cause a short-term decline in value.
Dogecoin analysis by Trader Tardigrade. Source: X.com
Previously, when the RSI’s overbought condition “eased back” to 50 in March 2024, a strong uptrend was observed on its daily chart. Based on the chart, the analyst hinted that a breakout above $0.50 over the next few days could happen “at any time.”
Mean dollar invested age for DOGE, BTC, XRP. Source: X.com
Data from Santiment, a data analytics platform, also mentioned that DOGE’s “mean dollar invested age” is flashing a bullish signal. The mean age of investment is down 31% in eight weeks for the crypto asset, indicating that dormant coins are returning to circulation. With respect to bullish momentum, the platform mentioned in an X post,
“The 2017 and 2021 bull markets similarly did not come to a halt until assets' mean ages started going "up" (getting older) again.”
Related: Majority of altcoins may see a 'slow bleed' until late January 2025: VC
DOGE could see a liquidity swipe between $0.32 to $0.34
While the long-term trend remains bullish, Dogecoin can drop to collect liquidity between $0.32 and $0.34 before exhibiting a higher high value. As observed, DOGE’s recent lows at $0.365 were swiped on Nov. 26, but further liquidity lows remain around $0.34 and $0.32.
In March 2024, a similar bullish breakout created liquidity lows near $0.12 and $0.10, after which DOGE retraced before continuing the trend.
Dogecoin 1-day chart side-by-side analysis. Source: Cointelegraph/TradingView
The important observation is that RSI eased back to 50 during the same time (as illustrated above) as the 50-day EMA was tested. Other similar confluences include the daily bearish engulfing pattern and ascending trendline breakout below, underlying the strong similarity of the past and present setup.
Thus, a retest of the 50-day EMA and a drop to $0.34 and $0.32 can occur before its next bullish leg up.
Related: Crypto ‘buy the dip’ moments to last longer this cycle: Hedge fund founder
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.