Dogecoin price analysis: bullish sign on the chart; Is the price drop over?
Although the overall situation of the digital currency market is still considered bearish, Dogecoin has the chance to extend its bullish correction of recent days to higher price levels; But will this surge continue or are traders facing a price trap?
To Report Cointelegraph, a “BARR” or “Bump and run reversal” pattern has been formed on the 1-day chart of DogeCoin, the bullish type of which changes the market trend from bearish to bullish after a rapid fall. This pattern actually consists of three different parts including lead-in, bump and run, all three of which should be correctly drawn on the chart.
In the first part or “Introduction”, we see the horizontal fluctuation of the price in a narrow range, which shows the temporary conflict between buyers and sellers.
After that comes the “bump” phase, where the price drops rapidly and then recovers. The price jump again will be accompanied by the breaking of the trend line of this pattern, which is referred to as the “execution” stage.
Dogecoin is currently still in the bump phase; But there is a short distance to break the resistance of the trend line of this pattern. Suppose that Dogecoin successfully overcomes the resistance of this pattern; In this case, the price can rise to the starting point of this pattern at $0.0941.
This level is 20% higher than today’s price of Dogecoin and is almost in the same area as the 200-week moving average (SMA 200 – blue line in the image).
Thomas Bulkowski, the creator of BARR, said that this pattern works correctly and reaches its price target 76% of the time. Interestingly, the rate of price jump after breaking the resistance of the pattern is also 55% on average; It means that there is a possibility that the price of Dogecoin will reach $0.123 after breaking the resistance of the pattern.
Is Dogecoin Downtrend Over?
A jump to $0.0941 may not be able to break DOJCOIN out of its long downtrend for several reasons that can be looked at from a fundamental and technical point of view.
From a technical point of view, the upward trend of Dogecoin these days, which has increased the price by 60% in the last 9 days, may continue to become a “bull trap”; Especially considering that in the 4-hour view of the market, a “rising corner” pattern is formed, which, contrary to its name, is a descending pattern.
In other words, the jump of these days in Dogecoin happened between two converging uptrend lines, which together form a bullish corner pattern.
This pattern generally indicates that the market trend will change and turn bearish after a possible break of the lower trendline support. Further, the price may fall as far as the maximum distance between the upper and lower trend lines of the pattern from the breakout point.
Also read: Getting to know 10 technical analysis chart patterns that every trader should know
A break of the pattern’s floor support will likely occur somewhere between $0.07 and $0.08; So, based on what we have reviewed, the target for this pattern could be somewhere between $0.05 and $0.06; That is, 15 to 25 percent lower than the current prices.
From the point of view of fundamentals, the continuation of the increase in the bank interest rate in the United States and the reduction of the balance sheet figure of 9 trillion dollars of the central bank of this country, in the short and medium term, will continue the downward trend of Dogecoin.