Dogecoin, a popular cryptocurrency, is currently experiencing a period of consolidation, with its price fluctuating between a nearby buy order block and a horizontal supply band on the daily chart. According to a recent analysis by Cantonese Cat, a technical analyst, an inverted head and shoulders pattern is emerging, which could potentially lead to a bullish breakout or breakdown. The Bollinger Bands, a technical indicator, are also indicating a possible shift in momentum, with the price trading above the baseline.
Dogecoin’s Consolidation Pattern
The inverted head and shoulders pattern, which is a reversal pattern, is formed by a left shoulder in early December, a deeper “head” in late December, and a right shoulder that is currently developing. The pattern is considered a bullish reversal pattern, and a break above the neckline resistance could confirm the pattern and lead to a potential price increase. The measured movement for the pattern corresponds to the distance from the neck line to the head low, projected upward from the neck line, with the target approaching a previously identified overhead coverage zone.
The Bollinger Bands on the two-day chart show the price trading above the baseline, with the upper and lower bands enclosing a range tied to highlighted resistance and recent lows. Sustained closes above the base and in the upper half of the bands may signal a shift in momentum after an extended decline. The upper Bollinger Band is close to the same zone identified as resistance on the daily chart, and if Dogecoin maintains support at the identified buy-side block and moves above the supply band, the inverse head-and-shoulders thesis would gain validity.
Technical Analysis and Market Outlook
Technical analysts are watching the price action of Dogecoin closely, as a loss of the buy order block would significantly weaken the pattern and shift the focus to the lower Bollinger band and the late December lows. The analysis suggests that the price is currently retracing towards the top of the buy order block after failing to sustain recent gains. The horizontal resistance band has served as supply during the last tests, and a break above this level is required for the inverted head and shoulders pattern to be confirmed.
According to the analysis, the target for the pattern is approaching a previously identified overhead coverage zone, and a break above the neckline resistance could lead to a potential price increase. The Bollinger Bands are indicating a possible shift in momentum, and sustained closes above the base and in the upper half of the bands may signal a shift in momentum after an extended decline. For more information on Dogecoin’s price action and technical analysis, please visit https://crypto.news/dogecoin-bulls-watch-key-inverse-head-and-shoulders-setup-near-resistance/.
