Dogecoin (DOGE) has recently faced a significant setback as it failed to retest the crucial $0.20 level on the monthly timeframe. As a result of this failure, the cryptocurrency has retreated into a confluent support area, consisting of the Range Low at $0.12 and the Macro Downtrend, from which it had previously broken out last month.
As DOGE now finds itself within this range, the chances of a recovery above the Range High appear to be slim, suggesting that the cryptocurrency may be destined to consolidate within this black-red range for the foreseeable future. However, Rekt Capital expects the Range Low area to offer the best bargain opportunity.
Weekly Timeframe Shows Strong Buy-Side Interest at Range Low
On the weekly timeframe, the Range Low has been acting as a robust support level, with numerous downside wicks extending into the Range Low and Macro Downtrend over the past several weeks. This indicates a strong buy-side interest in this confluent area of support.
The buying pressure at the Range Low has allowed DOGE to reclaim the bottom of the Bull Flag it had broken out from many weeks ago. For DOGE to lose this level, it would need to close below the Bull Flag bottom on the weekly timeframe, which has not occurred yet.
Potential Head and Shoulders Formation to Watch
One scenario to keep an eye on is the potential development of a Head and Shoulders (H&S) formation. If DOGE were to rebound from the old Bull Flag bottom to the old Bull Flag top but then reject, forming a Right Shoulder, a loss of the old Bull Flag bottom (which would act as the Neckline) could enable this H&S formation.
In this case, the price could drop into the Range Low, but this time as candle-bodies rather than wicks. Breaking beyond the Bull Flag Top would invalidate this H&S formation, while losing the Bull Flag Bottom (neckline) after rejecting from the Bull Flag Top would validate it.
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