Dogecoin Price Analysis: DOGE in Dilemma as Technical Levels and On-Chain Metrics Present Mixed Signals
- Dogecoin forms a bearish technical pattern hinting at a downswing to $0.16.
- DOGE’s transaction history model reveals that the path with minor hurdles is upward.
Dogecoin gained some ground after embracing support at $0.28 last week. The recovery that ensued came close to breaking above the hurdle at $0.35, but buyers lost steam. Instead, a correction is underway, with DOGE trading at $0.32.
Dogecoin declines linger with the formation of a descending triangle pattern
The meme coin is trading within the confines of a descending triangle, as observed on the four-hour chart. This is a popular continuation pattern that mainly appears mid-trend. When the pattern occurs, traders look forward to the price action continuing with the direction of the previous trend.
A descending triangle is a descending pattern created by a downward-slanting upper trend line and a flat trend line, acting as support. The pattern implies that sellers are getting more aggressive than the buyers while the price makes lower highs. At maturity, the price breaks out at the x-axis, leading the asset into massive losses.
DOGE/USD four-hour chart
If the descending triangle runs to maturity, Dogecoin investors would be in for another rollercoaster dive to $0.16. The breakout is measured precisely from the highest to the lowest of the pattern, as illustrated on the chart.
The downside price action heralds the rejection at $0.35 and seems to have been triggered after the price slipped under the 50 Simple Moving Average (SMA) on the four-hour chart. Trading below $0.3 would be detrimental to the progress made after support at $0.28 last week. Another strike at this anchor zone (triangle’s x-axis) may validate the anticipated downswing to $0.16.
Looking at the other side of the picture
The In/Out of the Money Around Price (IOMAP) on-chain metric by IntoTheBlock (ITB) shows that DOGE’s downside is well protected. This means that the slightest resistance path is upward, especially with the buyer congestion at $0.29 and $0.3. Here, nearly 65,500 addresses previously bought around 6.2 billion DOGE. Note that this support is in the company of equally more vigorous buyer congestion zones.
Dogecoin IOMAP chart
On the upside, the seller congestion zones highlighted by the model are relatively weaker compared to the support areas. In other words, Dogecoin could have a smooth path moving north rather than south. The most formidable resistance runs from $0.33 to $0.34.
Here, around 42,300 addresses previously bought roughly 4.8 billion DOGE. Trading above this zone may catapult the meme coin above the resistance at $0.35 and perhaps clear the path to $0.4.