Dogecoin (DOGE) has been showing bullish signs for the past five days and technical indicators are suggesting that it might start to rally towards the descending resistance line.
Critical Support Zone
Dogecoin (DOGE) has been trading above the $0.165 horizontal support area since early May On Jan. 5, DOGE appeared to have fallen below this zone for the first time in 257 days.
However, the price reclaimed this zone two days later and is currently in the process of confirming it as support. Furthermore, DOGE is still trading below the descending resistance line that has been in place since August 2021.
Daily DOGE/USDT chart | Source: TradingView
Future movement
Technical indicators are supporting an upward move to retest the descending resistance line.
This is particularly visible with the bullish divergences that have been developing on both the MACD and the RSI (green line). This is a bullish signal that often precedes rallies.
USDT chart | Source: TradingView
For the uptrend to continue, it is important for DOGE to make a higher low.
The most likely range for this is between $0.15 and $0.166. That target area is the 0.618-0.786 Fib retracement support. The latter level is also an area of horizontal support, increasing its strength.
USDT 2 hour chart | Source: TradingView
Count waves
Trader @ewforecast tweeted a DOGE chart and said that it has likely completed a corrective phase.
The source: Twitter
While that may be true in the short term, the entire move since July looks like one major corrective structure.
The main reason for this is the continued overlap in reduction that occurs from August to December 2021 (highlighted).
If true, DOGE is now in wave C of this ABC correction.
Giving Wave A:C a 1:1 ratio results in Wave C peaking at $0.32.
Daily DOGE/USDT chart | Source: TradingView
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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