Dogecoin Price Just Confirmed A Reversal With The RSI Divergence

Overview

Dogecoin’s price action on the daily timeframe is displaying early indications of a potential reversal after a prolonged downtrend. Following months of declining prices, technical analysis suggests that Dogecoin may be forming a critical turning point characterized by a double-bottom structure and an RSI divergence.

Technical Analysis of Dogecoin

Signs of Weakening Downtrend

Dogecoin has experienced an extended period of declining price movement, with its price hovering around long-term support close to $0.12. Recent technical analysis highlights a significant development: the Relative Strength Index (RSI) has not made a new low even as Dogecoin’s price revisits the same support level. Instead, the RSI has formed a higher low, indicating a bullish divergence between the price and momentum. This divergence suggests that selling pressure is diminishing, which is a critical factor as it has historically preceded relief rallies for Dogecoin when combined with robust structural support.

Double-Bottom Structure

In addition to the RSI divergence, Dogecoin’s price is also displaying a double-bottom formation along the lower boundary of a descending channel. This structural setup indicates a potential exhaustion of selling activity, which may signal an upcoming reversal. The longer Dogecoin maintains its position above this support base, the more compelling the argument for accumulation becomes.

For a confirmed reversal, Dogecoin will need to reclaim and sustain a price above $0.16. Achieving this level would validate the bullish RSI divergence and the double-bottom structure. However, a more significant rally is anticipated only if Dogecoin can break through the $0.31 resistance level.

Historical Context and Fractal Analysis

Further analysis of Dogecoin’s higher-timeframe charts reveals a fractal pattern that mirrors previous price movements. Notably, this fractal appears similar to one observed before a significant breakout in late 2024, where Dogecoin experienced a 331% increase. In that instance, the memecoin underwent a prolonged period of decline, developed a rounded basing structure, and subsequently launched into a steep ascent after a shift in momentum.

Currently, Dogecoin’s price action exhibits a comparable rounded recovery attempt, followed by a controlled pullback to long-term support. As of the latest data, Dogecoin is trading at approximately $0.1221, positioned at the base of a potential vertical move if the fractal pattern continues to unfold as anticipated.

From author

The developments in Dogecoin’s price action are noteworthy for traders and investors alike. The combination of a bullish RSI divergence and a double-bottom structure could signify a shift in market sentiment towards the memecoin. However, the necessity for confirmation at key resistance levels cannot be overstated, as the crypto market remains inherently volatile.

Impact on the crypto market

• Dogecoin’s potential reversal may attract renewed interest from traders looking for entry points.
• A successful move above $0.16 could signal a broader trend reversal, influencing market sentiment for other cryptocurrencies.
• The historical fractal pattern may lead to increased speculation and trading activity as traders anticipate a possible breakout.
• If Dogecoin’s price continues to hold above long-term support, it could trigger accumulation strategies among investors.
• The overall market dynamics may shift if Dogecoin successfully transitions from its corrective phase, potentially affecting altcoin performance.