70% Chance of a Dogecoin (DOGE) Price Bounce as Technical Indicators Suggest Oversold Conditions

Dogecoin (DOGE), the popular meme-inspired cryptocurrency, has experienced a turbulent ride over the past few months.

Popular meme-inspired cryptocurrency Dogecoin (CRYPTO: DOGE) has been encountering difficulties in recent months as it attempts to recover from a period of rapid price increase.

Following a series of bullish rallies earlier in 2024, which saw Dogecoin gain significant attention in the media and on social media, the cryptocurrency has encountered difficulties maintaining upward momentum. After reaching highs above the $0.190 range, Dogecoin encountered strong resistance and began a downward correction.

This downward trend has seen Dogecoin lose a portion of the gains it made during the bullish rallies earlier in the year, setting the stage for a potential technical analysis.

As of writing, Dogecoin is trading at $0.165, showing a decline of 3.6% over the last 24 hours. The cryptocurrency has encountered substantial selling pressure, leading to a slip from several key support levels.

After breaking through the $0.185 support zone, which had been holding since early 2024, Dogecoin dropped to the $0.172-$0.175 range. This level had previously acted as resistance but was swiftly breached by sellers. Afterwards, the cryptocurrency slid further, falling below the $0.160 zone, another critical support level that had been tested on several occasions during the recent rally from the 2023 lows.

Dogecoin Technical Analysis: Can A Bounce Be Expected?

A glance at the 4-hour chart reveals that Dogecoin has slipped below the Relative Strength Index 10. This reading, which falls below the oversold zone, is rarely encountered and suggests extreme oversold conditions. Typically, when an asset becomes oversold to this extent, it signals that the asset is due for a correction or a bounce. The 4-hour RSI is now indicating that the selling pressure may be nearing exhaustion, setting the stage for a potential bounce.

Moreover, the 1-hour chart shows that the RSI is still within oversold territory, with readings of 25-27. A reading below 30 is usually deemed oversold. Although the RSI is still signaling bearish sentiment, these levels suggest that a reversal could be forthcoming.

The daily chart also shows that the RSI is at 32-33, demonstrating a lack of strength in the cryptocurrency. Ideally, to indicate a strong bullish trend, the RSI should be above 50. However, it is still sliding despite being at oversold levels.

Overall, the oversold conditions across multiple time frames, especially with the 4-hour RSI falling below 10, suggest a higher probability of a bounce. Additionally, the fact that large investors, known as whales, are continuously accumulating despite the price movements also indicates a potential reversal.

Dogecoin Price Action: What To Look Out For

If a bounce occurs, the next resistance levels to watch will be in the $0.172-$0.175 range, where a confluence of Fib levels and a psychological round number could pose challenges.

However, there is still a 30-40% chance that Dogecoin could continue downward. If the cryptocurrency slips below the long-term ascending channel, it could continue decreasing throughout the week before attempting recovery.

The ascending channel, which began in 2015, has acted as a crucial level of support. Despite the recent drop, Dogecoin is still holding above this channel, which becomes more significant due to its presence since the cryptocurrency’s earliest days. A drop below this level could indicate a more bearish trend.

In the recent trading sessions, Dogecoin has tested this channel support on several occasions and bounced back each time, indicating that buyers are still interested in the asset at these levels. As the price remains above this critical support, it creates an opportunity for a potential reversal if demand for the cryptocurrency increases.