July 12, 2024

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Dogecoin (DOGE) price could soon break out from a short-term descending resistance line. If it is successful in doing so, it could also confirm a long-term bullish reversal.

DOGE price has been decreasing since May 2021 when it reached an all-time high price of $0.073. The decrease has followed a descending resistance line.

So far, DOGE has made six unsuccessful attempts at breaking out (red icon). So, an eventual price breakout for the coin is expected, due to the fact that lines get weaker each time they are touched. The most recent breakout attempt occurred on Oct. 4.

While following the line, DOGE price reached a new yearly low of $0.049 on June 15. The ensuing bounce served to validate the $0.051 horizontal support are and also created a long lower wick (green icon).

The weekly RSI movement also supports the possibility of a breakout. The indicator has generated a very significant amount of bullish divergence. Additionally, the divergence trend line is still intact, supporting the possibility of a breakout.

Since the line has been in place for more than a year, a breakout above it could greatly accelerate the rate of increase.

DOGE price bounce could lead to breakout

The daily chart shows that DOGE price has been following a descending resistance line since Aug. 16. The line has more recently been validated on Oct. 5 (red icon). At the time, it also coincided with the $0.065 resistance area, which is acting as the range high.

The rejection led to a low of $0.055 on Oct. 13. While this seemed like it caused a breakdown below the $0.058 range low, Dogecoin bounced and created a long lower wick. 

Now, it is approaching the point of convergence between the descending resistance line and the horizontal area. 

If a breakout occurs, the $0.065 to $0.068 price area is expected to act as resistance. The former is the range high while the latter is the 0.382 Fib retracement resistance area. 

Due to the lack of overhead resistance, DOGE could increase sharply if it moves above this level.

Long-term DOGE trend is bullish

To conclude, whether the DOGE price breaks down below the $0.058 horizontal area or breaks out from the descending resistance line instead will likely determine the direction of the future trend. Due to the bullish readings from the weekly time frame, a breakout is much more likely. 

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