Dogecoin's recent trend is a bit nerve-wracking, as the price chart vaguely illustrates a 'double top' formation—one of the signals that bulls least want to see. At the end of July, Dogecoin tried to break through the $0.30 barrier but failed; another attempt at the beginning of August also did not hold, ultimately closing at $0.27-$0.28, leaving a relatively low high point. This trend looks like it's brewing a double top formation, and if the price falls below the key support level, this formation is likely to be confirmed, increasing the possibility of a downward price movement in the short term.
Currently, Dogecoin's support level is between $0.21 and $0.22, with several moving averages providing support below. It’s particularly worth mentioning that the 50-day moving average is about to form a 'golden cross' with the 200-day moving average, which is typically a bullish signal in technical analysis and sounds quite promising. However, a golden cross is not a cure-all.
Currently, market momentum is a bit weak, and prices have not managed to break through recent highs, which has diminished the power of the golden cross. In simple terms, even if a golden cross does occur, it may only lead to a short-term surge, making it hard to support a significant rally.
Also, take a look at the trading volume; it has recently been unusually quiet, not providing enough momentum for price breakthroughs. If sell orders suddenly flood the market, with such low trading volume, prices are likely to drop even faster. The relative strength index (RSI) is currently hovering around 50-55, which is a neutral zone without signs of overbought or oversold conditions, and no obvious divergence signals have been observed.
In other words, the market currently lacks a clear direction, and the hope of breaking through $0.28 is not high. If Dogecoin cannot quickly rebound and establish itself above $0.28, the confirmation of the double top formation is likely to leave many feeling uneasy.
Speaking of Dogecoin's fans, someone asked: How can Dogecoin reach $1?
In fact, this matter depends on whether three conditions can be met:
First, Ethereum needs to gain strength and break through the historical high of 2021 to ignite the entire cryptocurrency market and confirm that a bull market has truly arrived. Currently, Ethereum is still lingering at a high level, and the momentum for a breakout is not strong enough.
Second, Dogecoin's upward momentum is closely related to the halving cycle of cryptocurrencies. Historically, about 486 days after a halving, there is often a golden time for a significant market rebound. This rhythm has not yet fully aligned, so we may need to wait and see if the market can gather enough momentum.
Thirdly, the expansion of the global money supply (M2) needs to be strong. With more money, investors are more willing to take risks on assets like Dogecoin.
The problem is that the current global economic environment is somewhat complicated; inflation pressures and signs of tightening monetary policy may slow down the expansion of M2, making it harder for Dogecoin to ride the wave. Furthermore, regarding Dogecoin's 'meme coin' attribute, its price fluctuations are closely tied to community sentiment and the heat of social media discussions. At the beginning of 2021, a tweet from a celebrity could skyrocket the price, but now discussions on X have noticeably decreased, and there are no major events to spark interest.
If Dogecoin wants to become popular again, it may have to rely on major institutions suddenly announcing support, or some new gameplay emerging. From a technical perspective, Dogecoin needs to quickly break through $0.28 with large trading volume to turn things around; otherwise, continuing to hover between $0.27 and $0.28 will only weaken market confidence further, and a drop to the support area of $0.21 to $0.22 is also possible. Investors should also keep an eye on macroeconomic movements, such as the Federal Reserve's interest rate policies, global liquidity, and the overall risk appetite in the cryptocurrency market, as these can influence Dogecoin's trend.
Overall, Dogecoin is currently somewhat caught between technical and fundamental factors. The threat of the double top formation, low trading volume, and the uncertainty of the macro environment make it challenging to break through in the short term. Those looking to invest in Dogecoin should stay vigilant, watching the resistance level at $0.28, while also keeping an eye on Ethereum's movements, the rhythm of the halving cycle, and the direction of global monetary policy. Dogecoin has a long way to go to reach $1, so take it slow!
