Dogecoin Could See A Price Crash Soon

Crypto analysts are sounding the alarm on Dogecoin as a classic chart pattern known for predicting bearish trends has emerged. Technical His Analyst Josh Olszewicz, @CarpeNoctom, flagged There is a possible Head and Shoulders (H&S) formation on the DOGE/USD 12-hour chart of X, indicating the possibility of a significant price decline if the pattern is confirmed.

The H&S pattern is a technical indicator that is traditionally considered a bearish signal within the trading community. The pattern is that he is made up of three peaks, with the central peak (head) being the tallest, and the two outer peaks (shoulders) being lower and approximately equal in height. The line connecting the lowest points of two troughs (the neckline) is horizontal or sloping and represents an important support level.

Dogecoin should hold $0.14

For Dogecoin’s 12-hour chart, the price has completed the left shoulder and head and is now forming the right shoulder. As annotated by Olszewicz, the neckline of this H&S pattern of his has been determined to be approximately $0.14. This level is very important. The following decisive break could confirm the bearish prediction implied by the H&S formation.

Dogecoin head and shoulders pattern, 12-hour chart | Source: X @CarpeNoctom

Another technical detail present on the chart are Fibonacci retracement levels, which are horizontal lines that indicate where support and resistance are likely to occur. These are based on the Fibonacci sequence, a sequence famous in mathematics and nature for its proportional relationships.

Here, the 0.5 Fibonacci level coincides with the left shoulder at approximately $0.18, and the 0 level coincides with the peak at approximately $0.23. These levels are key to determining potential areas of support and resistance in the market.

Olszewicz also highlighted the expected target areas based on the typical behavior of the H&S pattern. This bearish target is identified using the height of the pattern from the top of the head to the neckline, projected downward from the neckline break point. The target box marked in green coincides with the 1.618 and 2.0 Fibonacci extension levels, indicating a potential fall from $0.10 to $0.09. A fall to this level could result in a 40% price crash.

The importance of the H&S pattern lies in its reliability as a trend reversal signal. Verify when the price breaks below the neckline after the formation of the right shoulder. For traders and investors alike, this pattern serves as a warning against potential downside risks.

As of the latest chart by Olšević, the neckline has not been breached and the pattern has not yet been confirmed. It is important for observers to keep a close eye on the $0.14 level, as a break below it will likely stimulate selling and fulfill H&S’s prophecy. However, until such a break occurs, this pattern remains a cautious indicator rather than a confirmed trend reversal.

In summary, Dogecoin’s price chart shows signs that could be concerning for bullish investors. If history is any guide, the new H&S pattern that analysts like Olsiewicz are watching closely suggests that Dogecoin’s value could fall in the near future. However, only a decisive break below the neckline confirms this pattern and turns caution into a bearish outlook.

At the time of writing, DOGE was trading at $0.1509.

dogecoin price
DOGE price, 1 week chart | Source: DOGEUSD on TradingView.com

Featured images created with DALL・E, charts on TradingView.com

Disclaimer: This article is provided for educational purposes only. This does not represent NewsBTC’s opinion on whether to buy, sell, or hold an investment, and investing naturally involves risk. We recommend that you do your own research before making any investment decisions. Your use of the information provided on this website is entirely at your own risk.

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