Gradual Losses May Await Dogecoin
BeInCrypto | Mar 22, 2019 02:56AM ET
On Mar 18, 2018, the price of Dogecoin (DOGE) reached a high of $0.002125. Since then, it has been on a gradual downtrend—without significant fluctuations.
When will this downtrend end? Continue reading to find out.
Dogecoin Price Fluctuations: March 18-21, 2019
In our Mar 18 price analysis , we predicted that the price of would increase slightly before eventually breaking down. Our prediction was validated on Mar 20, when the price broke down from the triangle pattern.
Today’s analysis suggests that price is likely to continue to decrease at the rate predicted by the channel.
h3 DOGE: Trends and Highlights For March 21/h3- Price has been on a downtrend since Mar 18.
- It is trading inside a descending channel.
- There is bullish divergence developing in the RSI.
- There is resistance near $0.00211 and $0.00217.
- There is support near $0.00204 and $0.00198.
The price of Dogecoin on Hitbtc is analyzed at one-hour intervals from Mar 18 to Mar 21.
Price reached a high of $0.002120 on Mar 13. A sharp drop ensued. Since then, the price has reached similar highs five times. Tracing these highs gives us a horizontal resistance line.
Price also reached a low of $0.002011 on Mar 13. A gradual uptrend ensued, with several market cycles being completed. Each low was higher than the preceding one. Tracing these lows gives us an ascending support line.
The support and resistance lines combine to create an ascending triangle.
This triangle is a better predictor of price fluctuations that support or resistance alone. The price is likely to move inside the confines of the triangle until a breakout or breakdown occurs. Breakdowns typically signify forthcoming price decreases—which can be quite rapid.
Dogecoin broke down below the support on Mar 20. Prices have stayed below this level since—suggesting that a new trading pattern may be emerging.
h3 Tracing Resistance/h3
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To assess whether or not new resistance and support are developing, we examine price from Mar 18 to 21.
On Mar 18, DOGE reached a high of $0.002125. A sharp drop immediately followed. Price gradually began to decrease, but the overall trend since Mar 18 has been downward.
Several market cycles have been completed during the last several days. In each case, the price of Dogecoin has made consecutively lower highs.
This line has been validated four times. Tracing these highs gives us a descending resistance line as seen on the graph above.
The resistance line acts as a ceiling to price—theoretically tracing the upper limits of the price for a given period. It also measures the rate of decrease.
Price has been decreasing at the same rate as predicted by the descending resistance line.
Wick breakouts such as the $0.002121 on Mar 19 can be considered insignificant because they were not supported by sustained gains above the line.
It is unlikely that the price moves above this line. Sustained movement above the line would indicate that a surprise breakout has occurred. Subsequently, a possibly rapid price spike might follow. However, we must stress that we do not believe this situation to be imminent.
h3 Descending Channel/h3Having traced resistance, we must now trace support to determine the current trading pattern for the same period (Mar 18-21).
The price reached a Mar 18 low of $0.002073. A gradual upward move ensued, followed by a longer downward move. The price has continued to make lower lows since.
Tracing these lows gives us a descending support line.
The support line can act as a floor to price similarly to the way resistance acts as a ceiling. It theoretically traces the lower limits of the price over a period of time. It also serves to gauge the rate of the price decrease.
Wick breakdowns such as those which occurred on Mar 18 and Mar 20 can be considered insignificant since they are not supported by continuous losses below the line.
The resistance and support lines combine to create a descending channel. This is a typically neutral trading pattern which suggests that price may rise and fall within the channel. Because the channel is downward facing, highs and lows are expected to reach consecutively lower levels.
In other words, a longitudinal price drop with rises and dips within the channel traced is likely.
h3 Bullish Divergence/h3The moving average convergence divergence (MACD) is a trend indicator that shows the relationship between two moving averages (long and short-term) and the price. It is used to measure the strength of a move.
Combined with simple moving averages (SMA), MACD can be used as a trigger for buy and sell signals. Signals are triggered whenever the MACD line is above 0 and the price is above the 21 (red) and 50-period (green) SMAs.
On Mar 20, the price reached a low of $0.002065. It has continued to make lower lows since.
During the same interval, the MACD and RSI reached a low on Mar 20 and has since generated higher values.
This inverse relationship between price and the technical indicators is known as bullish divergence and often precedes in price increases. However, the level of divergence is not very significant and is occurring in a neutral pattern, dampening its validity.
At the time of writing, DOGE was trading near the support. Based on these indicators, a rise toward resistance within the confines of the channel is possible in the near future. However, in the longer term, gradual price decreases are expected to continue.
h3 Reversal Areas/h3The price of Dogecoin on Hitbtc is analyzed at two-hour intervals from Feb 24 to Mar 21 in order to better visualize possible reversal areas.
Resistance and support areas are formed when the price reaches a certain level several times. They can act as a ceiling/floor that prevents the price from moving further in that direction.
The first resistance area is found near $0.00211, followed by the resistance area at $0.00217. If the price breaks out from the channel, this is a likely place for a reversal and a possible future resistance line.
The closest support area is found near $0.00204, followed by the second one at $0.00199. If the price breaks down from the channel or keeps decreasing at the rate predicted by the channel, it is likely that the price will reach the first area.
h3 Summary Of Analysis/h3Based on this analysis, it is likely that the price of DOGE trades inside the confines of the descending channel until a decisive upward or downward move. If the price touches the resistance or support lines two or more times, our prediction will be validated. If it breaks out before touching the resistance and support lines, it will be invalidated.
When do you think the price of DOGE will make a decisive move? Let us know your thoughts in the comments below.
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