Head And Shoulders Alert: Dogecoin Could See A Price Crash Soon

Crypto analysts sound the alarm on Dogecoin as a classic chart pattern emerges

Technical analyst Josh Olszewicz (@CarpeNoctom) has identified a potential Head and Shoulders (H&S) formation on the DOGE/USD 12-hour chart, suggesting a potential significant price drop if the pattern holds true.

The H&S pattern is a technical indicator traditionally viewed as a bearish signal. It consists of three peaks, with the central peak (the head) being the highest and the two outside peaks (the shoulders) being lower and approximately equal in height. The line connecting the lowest points of the two troughs (the neckline) can be horizontal or sloped and represents a critical support level.

Dogecoin Must Hold $0.14

On Dogecoin's 12-hour chart, the price has formed the left shoulder and the head, with the right shoulder currently forming. The neckline of this H&S pattern is identified at approximately $0.14, as annotated by Olszewicz. This level is crucial; a decisive break below could confirm the bearish forecast suggested by the H&S formation.

Dogecoin head & shoulder pattern, 12-hour chart | Source: X @CarpeNoctom

Another technical detail present on the chart is the Fibonacci retracement levels, which indicate potential support and resistance areas. They are based on Fibonacci numbers, a sequence known for its proportionality.

The 0.5 Fibonacci level aligns with the left shoulder around $0.18, while the 0 level coincides with the peak at approximately $0.23. These levels are key to determining potential support and resistance areas in the market.

Olszewicz has also highlighted a projected target area based on the typical behavior of the H&S pattern. This bearish target is identified using the height of the pattern from the head's peak to the neckline, projected downward from the point of the neckline break. The target box, marked in green, shows a potential decline to $0.10 to $0.09, coinciding with the 1.618 and 2.0 Fibonacci extension levels. A fall to this level could lead to a price crash of 40%.

The H&S pattern is a reliable trend reversal signal. It is validated when the price breaks below the neckline following the formation of the right shoulder. For traders and investors, this pattern serves as a warning to prepare for potential downside risks.

As of the latest chart by Olszewicz, the neckline has not been breached, and the pattern has yet to be confirmed. It is critical to watch the $0.14 level closely, as a break below it would likely trigger a sell-off, fulfilling the H&S prophecy. However, until such a break occurs, the pattern remains a watchful indicator rather than a confirmed trend reversal.

In summary, Dogecoin's price chart is showing signs that could concern bullish investors. If history repeats itself, the emerging H&S pattern suggests a possible downward move in Dogecoin's value in the near future. However, only a decisive break below the neckline will validate this pattern, turning a watchful eye into a bearish outlook.

At press time, DOGE traded at $0.1509.

DOGE price, 1-week chart | Source: DOGEUSD on TradingView.com

Featured image created with DALL·E, chart from TradingView.com

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