Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
On the long-term outlook, Dogecoin has been in a downtrend since June last year. The price has been unable to set a higher high and has registered a series of lower lows to characterize a downtrend. There have been times in between when DOGE bulls rode a wave upward but the longer-term trend remained downward. Could a bullish Bitcoin catalyze a reaction?
DOGE- 1 day chart
Source: DOGE/USDT on TradingView
Since December, the price has tested the $0.2 area of supply multiple times but has been rejected on each try, with the latest being in mid-January.
A set of Fibonacci retracement levels were drawn based on DOGE’s drop from $0.34 to $0.12. In early February, the wider crypto market saw some short-term bullishness, and so did Dogecoin. However, even this wave upward was rejected at the 23.6% retracement level at $0.1723.
This indicated that Dogecoin could see further losses in the weeks to come. To break the bearish market structure, DOGE needs to flip the $0.1723 and $0.196 levels to support, and convince market participants that the long-term trend could have flipped.
Rationale
Source: DOGE/USDT on TradingView
The daily RSI has risen past neutral 50 only a couple of times in the past two months and has been unable to rise above 60 on either attempt. Since late November, the RSI has been below neutral 50 to indicate bearish momentum has been significant in recent months.
On the OBV, there was no strong indication that buying volume was on the rise. The OBV has been forming higher lows in recent months- which was slightly encouraging, but not enough information to buy DOGE based on.
The MACD also struggled to rise above the zero line- it hasn’t been able to since November, although it was on the verge of forming a bullish crossover below the zero line.
Conclusion
The market structure for DOGE was bearish, and each bounce from the $0.135 and $0.12 levels has been weaker and weaker. Simply put, demand has been weakening lately.
Therefore, risk-averse investors would like to see the $0.135-level flip to support before considering buying.
