This article is also available in Spanish.
Crypto analyst Balo (@btcbalo) highlighted a major technical breakout on the Dogecoin (DOGE/USD) chart that suggests a bullish trend in the near future. Balo’s analysis, based on the 4-hour chart, points to several important technical developments driving the expectation of a further rise in Dogecoin’s price.
Why Dogecoin Looks Poised to Converge
The basis of Balo’s analysis centers on Dogecoin’s decisive break of the long downtrend line on December 28. This downtrend line, which was initially established from December 8 at the $0.48 level, had served as an incredible level of resistance, effectively controlling the price movement -DOGE in mid-December.
Related Reading
A break above this trend line marks an important turning point. After this rise, Dogecoin experienced a small recovery where memecoin quickly retook the broken trend line. However, the retest was successful, strengthening the opinion of Dogecoin.
Completing the breakout of the downtrend line is the breakdown of the descending triangle pattern that has been forming since December 21. The descending triangle is characterized by a series of lower highs meeting a flat support level, usually indicating a potential bearish continuation.
However, Dogecoin’s ability to break out of this formation today, on January 2 suggests a change in market sentiment. The emergence of a descending triangle, accompanied by a breakout, enhances the bullish narrative, although a re-examination of the upper boundary of the triangle would provide further confirmation of this upward trend.
Part of Balo’s thesis for large exits is also the volume profile, which provides a summary understanding of trading activity at various price levels. Dogecoin rebounded from major support at the $0.32 high, indicating a strong base for accumulated trading gains.
Related Reading
To the upside, volume has thinned to the $0.40 region, where there is a large rally to $0.43. This consolidation means that above this area, DOGE may face little resistance, paving the way for Dogecoin to target its annual high of $0.4834, recorded on December 8.
Further strengthening the bullish outlook is the completion of the ABC pattern on the Dogecoin chart. The ABC pattern is a corrective sequence in technical analysis that usually indicates the end of a retracement phase and the continuation of the previous trend. In the case of Dogecoin, the completion of this pattern is loosely consistent with other bullish indicators found in the breakout and volume profile analysis.
Therefore, Balo’s comment “DOGE [is] it’s starting to break, I see no reason to stop now. Real new high soon,” would indicate that DOGE is headed for a new high.
At press time, DOGE traded at $0.34.
The featured image was created with DALL.E, a chart from TradingView.com