Popular cryptocurrency analyst and trader, Crypto Daily Trade Signals, has issued a warning to the Dogecoin community about a potential downside risk for the popular meme-inspired crypto asset as it confronts a bearish technical pattern amid a wider negative sentiment in the digital asset market lately.
Dogecoin Forms Bearish Descending Triangle Pattern
Crypto Daily Trade Signals’ analysis delves into Dogecoin‘s current market structure, identifying the formation of a Descending Triangle Pattern. The descending triangle is characterized by a series of lower highs pushing against a flat support level which is currently located at $0.121, and is usually seen as a bearish continuation signal.
According to the expert, although the triangle’s base at $0.121 offers strong support for DOGE, the current bearish market conditions brought about by Bitcoin, the largest cryptocurrency asset, can make it meaningless. Furthermore, he noted that after testing the support level about 3 times, investors are hopeful that the level would hold this time around.
The post read:
DOGE price was previously trending inside a giant descending triangle. The base of the triangle provides robust support for DOGE but prevailing bearish market conditions created by Bitcoin may render it useless. The support has been tested three times before and investors are hoping it will hold water now.
Crypto Daily Trade Signal also underlined another bearish trend for the asset price, which is indicated by DOGE trending below the 50-day and 200-day Simple Moving Average (SMA).
It is important to note that triangles that descend are typically not bullish, but when they resolve upward, they usually trigger an explosive rally. In the event that there is a rebound at this price point, the analyst believes DOGE might break out of the existing market structure and reach $0.237. However, the crypto asset path on the upside might not be easy as Crypto Daily Trade Signals have pointed out two crucial resistance levels at $0.182 and $0.206.
Meanwhile, should the crypto asset fail to rebound and fall below the base of the triangle, the expert anticipates a decline toward the $0.96 price level and even further to the $0.072 level in the upcoming days.
Growing Pessimism From Investors
Given that Dogecoin has been having difficulty regaining traction, this technical analysis comes at a crucial time for the meme coin. The general market decline has exacerbated the difficulties, as investors continue to lose faith in the short-term potential of cryptocurrencies.
As DOGE continues to navigate this descending triangle, the next several days will be crucial in deciding if the asset can resist the bearish pressures or give in to a more severe decline.
At the time of writing, DOGE has attracted positive sentiment, trading at $0.125, demonstrating a 2.79% increase in the past day. Although its market cap has increased by over 2%, its trading volume is down by more than 34% in the past day. Today’s bullish momentum witnessed within the meme coin market suggests that DOGE may be in a position to attract more gains in the days ahead.
Featured image from Adobe Stock, chart from Tradingview.com
