Dogecoin (DOGE) is trading at $0.0714 with a bearish bias on both the daily and weekly timeframes. The meme coin has been on a downtrend, underpinned by a stubborn trendline, a technical setup that forecasts a massive drop on the daily timeframe.
Fortunately for DOGE holders, the coin presents a hidden bullish signal on the longer timeframe, pointing to a potential recovery as long as certain things are in place. This involves Dogecoin bulls overcoming key hurdles and seeing momentum strength indicators turn bullish.
Dogecoin price needs a bullish trigger
DOGE turned away from the $0.76 high in May 2021 to set a swing low below $0.05 in June 2022. The price has since held up above this level with recovery attempts being continuously halted at the descending trendline. This price action has led to the appearance of a descending triangle, forecasting a drop to $0.0073.
The good news is that a trend reversal appears to be on the cards as long as a few conditions are met.
- The ARMS Index (TRIN) has been moving below the 1.25 line, suggesting that there are more sellers than buyers. A decisive flip above this line would confirm oversold conditions allowing the bulls to take over and attempt a rally.
- The Relative Strength Index (RSI) has spent roughly 7 weeks below the mean level and is trying to rise above it. A successful re-entry into the positive region, would confirm the beginning of an uptrend.
If these two conditions are met, market participants could expect Dogecoin price to breach the $0.076 to $0.089 supply zone, where both the 50-weekly and 200-weekly Simple Moving Averages (SMAs) lie to reach the short term target at $0.09.
A rise above this level would see Dogecoin rise above the descending trendline to confirm entry into a sustained bull run. If this happens, the dog-themed altcoin could attempt a retest of the $0.12 level, embraced by the 100 SMA.
DOGE/USD Weekly Chart
On the flip side, Dogecoin traded below all the major SMAs, suggesting that it faced an uphill task. The value of the RSI at 44 indicates that the market conditions still favor the downside. Therefore, a weekly candlestick close below the $0.070 psychological level would create a lower low with DOGE dropping toward $0.05.
Losing this long-standing support wall would invalidate the bullish narrative. Such a scenario would see DOGE slide toward the $0.04 zone, representing a 43% slide from the current price.
