A readjustment in DOGE's RSI and renewed market activity indicate the possibility of a bullish reversal, with $0.50 as a key breakout level.
Temporary drops to $0.32-$0.34 could generate liquidity, potentially leading to a rally in line with historical patterns and bullish sentiment.
According to data from Santiment, the 'average dollar age' of DOGE has fallen by 31% in the last eight weeks, indicating greater circulation of inactive coins. In early November, Dogecoin traded within a narrow range of $0.35 to $0.48 after its explosive rise of 208%.
Previously, CNF highlighted the bullish signals for Dogecoin and the potential breakout targets of $8-$10, aligning with historical growth patterns. Recent price corrections caused DOGE to fall below an upward trend line, raising concerns about a bearish shift. However, analysts suggest that this pullback could pave the way for a new rally.
Cryptocurrency pattern analyst Trader Tardigrade noted that DOGE's Relative Strength Index (RSI), which recently indicated overbought conditions, has now reset, which could signify an upcoming bullish reversal.
The RSI reset points to a possible breakout
The weakening RSI reflects a pattern observed in March 2024, when a similar reset preceded a strong bullish trend. According to Tardigrade, Dogecoin could surpass $0.50 in the coming days if history repeats itself.
Supporting this optimism, Santiment's data shows that the decline in DOGE's average dollar age suggests renewed market activity, a trend historically linked to bullish momentum. Santiment's tweet stated:
One of the most overlooked metrics in crypto, the average dollar age invested, is showing a bullish signal despite the overall market pullback this week. #dogecoin
Short-term drop before the next rally
While the overall outlook remains positive, analysts predict that DOGE could temporarily drop to $0.32-$0.34 to gather liquidity before its next upward move. Historical patterns suggest that such pullbacks, often accompanied by a test of the 50-day EMA, usually precede significant rallies.
Currently, Dogecoin (DOGE) is trading at $0.41, reflecting a 2.04% increase in the last day and a 7.85% decrease in the last week. Traders are keeping a close eye on a breakout above $0.50, which could confirm the continuation of its upward trajectory.