As market volatility sends Dogecoin (DOGE) to retest its breakout level, some analysts have advised “cautious” optimism for the leading memecoin, arguing that weak bullish momentum could invalidate the recent price action.
‘Optimism With A Seatbelt On’
On Thursday, Dogecoin fell to a one-week low of $0.095 before bouncing back above the $0.098 support level. The cryptocurrency has been hovering between $0.096 and $0.104 for the past six days, briefly reaching a multi-week high of $0.117 during the weekend.
Notably, DOGE broke out of a one-month descending trendline after last week’s price surge, igniting optimism among investors. However, the market’s volatility has halted the leading memecoin’s momentum, which is now moving sideways within its local range.
Market observer Whale Factor highlighted that Dogecoin has returned to “the ultimate support level” located at $0.097. This level is a macro resistance-turned-support, serving as a key bounce area over the past two years.
“We’ve seen this play out twice before with massive bounces. (…) If this horizontal support holds, the risk/reward for a long position here is insane,” he affirmed, adding that a rebound from this level could target the $0.15-$0.20 area.
Meanwhile, analyst Trader Tardigrade noted the recent performance, explaining that the breakout and the subsequent retest of the downtrend line is “textbook bullish price action.” Nonetheless, he has warned that he is “cautiously optimistic” due to weak bullish momentum.
As he explained, the descending trendline has been retested and held as support over the past five days, printing daily closes above the breakout level. This signals that the structure remains bullish.
Despite this, the analyst considers the rally “feels a bit underpowered” and that DOGE’s uptrend momentum “is lacking strength” as the price is slowly retracing the recently climbed levels.
“Price has to attract real demand to make this breakout credible. Keep an eye on volume and punchier candles—until those show up, it’s optimism with a seatbelt on,” he asserted.
Dogecoin To Repeat Previous Performances?
Trader Tardigrade also pointed out that Dogecoin seems to be mirroring the same pattern that has previously led to parabolic moves. Per the post, the memecoin has completed a “Solid Base structure” twice before, first in 2016 and then in 2020.
The analyst emphasized that historically, “when DOGE finishes building these bases, it doesn’t take long before the breakout happens.” Now, the cryptocurrency is at the edge of the third base, with the “same prolonged consolidation, same gradual accumulation, same compressed energy.”
Similarly, market watcher Bitcoinsensus observed that in past cycles, Dogecoin had “thrived during strong risk-on environments,” typically breaking out after long stretches of consolidation.
Notably, the cryptocurrency saw a 95x move between 2017 and 2028 after breaking out of its macro consolidation range. Then, it recorded a 310x rally toward its latest all-time high (ATH) following its 2020 breakout.
The chart shows that the altcoin could be near the end of its long consolidation period, and a parabolic move could begin in the next year. “If this cycle plays out like previous ones, Dogecoin may have room to push toward the $5 zone,” the analyst concluded.
As of this writing, DOGE is trading at $0.097, a 1.1% decline in the daily timeframe.
Source: https://www.newsbtc.com/news/analyst-cautiously-optimistic-dogecoin-price-rally-stalls/
