Dogecoin (DOGE) Faces Resistance After Strong Weekly Rally: What Next?

Dogecoin (DOGE) Faces Resistance After Strong Weekly Rally

Over the past week, Dogecoin (DOGE) has experienced significant buying pressure, leading to a 27% increase. However, a review of the 1-day chart indicates potential resistance, suggesting a possible short-term reversal in the current rally.

DOGE 1-Day Chart Analysis

On the 1-day chart, DOGE's price has reached $0.19216, approximately 2.19% below its daily high of $0.20435. Despite the weekly chart's bullish trend, the daily chart suggests that DOGE may encounter bearish momentum if it continues to retreat from the upper Bollinger band at $0.19082.

This retreat could indicate a weakening in the bullish trend, as traders may be taking profits at this price level. The Simple Moving Average 20 (SMA) is positioned at $0.15595, providing support to prevent a further decline in DOGE's price should it continue to pull back.

Bollinger Bands Indicate Volatility and Resistance

The Bollinger Bands on the daily chart reveal that DOGE has recently experienced high volatility. Its rise above the upper Bollinger Band at $0.19082 signified increased buying pressure. However, the subsequent pullback from this level suggests DOGE may face challenges in sustaining its rally.

Typically, a price crossing the upper Bollinger Band is followed by a peak in buying pressure in the near term.

RSI Indicates Overbought Conditions

The Relative Strength Index (RSI) on the daily chart currently stands at 71.83, above the overbought zone of 70. An RSI above 70 typically indicates overbought levels, increasing the likelihood of a short-term price correction as traders secure profits.

If the RSI falls below 70, this would further confirm a reduction in bullish pressure and could indicate a retracement phase. For sustained long-term bullish momentum, the RSI should ideally consolidate around 60-70 levels rather than remaining in the overbought territory.

Expert Opinions on DOGE

Dogecoin has garnered considerable attention lately, with market analysts expressing varying perspectives. Analyst Ali predicts that Dogecoin could reach new highs, potentially even exceeding $4-$23, if it breaks through key resistance levels and follows patterns observed in previous bull cycles. Ali attributes the recent price increase to high-profile endorsements.

Conversely, other analysts caution against overinvesting in Dogecoin, highlighting potential risks associated with a price reversal. Given the volatility of the cryptocurrency market, they emphasize that Dogecoin's recent gains could be transient, particularly if there is a surge in profit-taking around current resistance levels.