Dogecoin price has been testing the critical support levels, suggesting a possible trend reversal.
According to a recent technical analysis, the meme coin is likely to break out of the present bearish trend with some indicators hinting toward a bullish move.
Dogecoin Price Support Level
Currently, the Dogecoin price has been trading stably above the crucial support of $0.16. This level has been recognized by Trader Tardigrade to be the opportune stage for the bull cycle trend.
Despite experiencing some downward movements in the last few days, the potential for further gains is bullish as the meme coin was able to trade above this level of support.
Notably, Dogecoin price has been forming a multi-year ascending triangle which is a chart pattern that frequently precedes price breakouts.
If Dogecoin can break past its resistance level at $0.17, Tardigrade suggests it will hit higher price levels as it could cause a trend reversal.
This has generated some optimism about the crypto’s future price movement, as the coin is currently positioned near the resistance area.
Stochastic RSI Crossover: A Key Bullish Indicator
Another important factor supporting the possibility of a trend reversal for Dogecoin is the nearing Stochastic RSI crossover.
A close look at this indicator is essential, as when it goes positive, this is often considered the starting point of a new bullish phase as noted by analyst Ali Martinez.
According to historical data, previous crossovers of the Stochastic RSI often lead to Dogecoin price rallies.
Notably, the Stochastic RSI is a momentum oscillator that determines where the RSI lies within the range of its price over a given period.
A crossover occurs when the RSI line moves above a certain threshold, signaling the potential for an upward price move.
If the Stochastic RSI performs a bullish crossover on the weekly timeframe, it could suggest that the Dogecoin price may experience a sharp rally, similar to past occurrences.
The last time this occurred, Dogecoin saw substantial gains, including price increases of 88%, 187%, and 444%.
Given such precedents, traders and analysts keep a close watch on this indicator to determine the possibility of a price breakout.
Surge in Dogecoin Network Activity
Apart from the technical indicators, the increased Dogecoin network activity provides additional ground for a trend reversal. In the past month, the number of new addresses on the Dogecoin blockchain grew by more than 100%.
The sudden surge in on-chain activity could signify renewed interest in Dogecoin which could prompt more price increases.
A rise in new addresses indicates a recovery in market sentiment and investor participation. An increase in network activity could suggest that more people are engaging with Dogecoin.
These could either be through buying, holding, or applying the cryptocurrency for different purposes.
Such an uptick in user engagement may give Dogecoin some necessary momentum as it breaks above resistance levels and potentially starts a bullish trend.
At the time of writing, Dogecoin price was trading at $0.1693, showing a 0.32% gain over the last 24 hours.
