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Dogecoin is preparing for a potential price reversal, but its positive momentum has recently shown signs of weakness.
The price of Dogecoin (DOGE) has begun to show signs of weakness as negative sentiment seeps into its short time frames, forming what is called a death cross on its hourly chart.
Nevertheless, this may not be a real alarm bell, as the price of Dogecoin (DOGE) has performed strongly over the week, gaining an additional 17% by reclaiming the $0.18 level, benefiting from renewed optimism among market participants and a return of risk appetite following the easing of trade tensions between the U.S. and China, and Trump's concession to the Federal Reserve. Here, Dogecoin may have been among the altcoins that received new liquidity from small traders' investments.
Has the price of Dogecoin (DOGE) officially entered a bear market?
With the MACD indicator's movements retreating below the signal line in what is known as a death cross, this often indicates a shift in direction with a loss of buying momentum. However, options data suggest that the price of DOGE may possess sufficient strength.
Despite its bearish indicators, the speculative trading rate for price increases compared to that for decreases over a 4-hour period remained positive at 1.97, indicating that 66.3% of traders expect the price of DOGE to continue recovering according to Coinalyze data.
We can say that the overall sentiment has not completely changed direction, especially with the funding rate (total speculative trades on price direction) rising by 1.97% during the same period, thus no real reversal can be declared before the price turns towards a clear downward direction.
Dogecoin Price Forecast: Is a price reversal looming?
The price of Dogecoin is still on its path to make a breakout as it approaches the upper barrier of its descending channel, which has formed its ongoing downward trend for several months.
The price movements of DOGE/USDT over a 3-day period within a descending channel, source: TradingView/Binance. The price of the coin has recently surpassed the 20-day Simple Moving Average (SMA-20), which had previously prevented its rise during last Thursday's trading, opening the door for a 45% increase towards the resistance barrier of $0.25.
The rise seems likely as momentum indicator readings increase, as the three-day MACD may confirm its stability above the signal line after turning positive for the first time since the rally following the U.S. elections, indicating clearly that its upward trajectory remains strong.
However, the Relative Strength Index (RSI) reading stabilized at 45, which is a neutral level, indicating that longer time frames have not fully shifted to an upward trend yet. If buying pressures continue, an upward breakout could lead the price towards $0.48, representing a potential gain of 160% compared to current levels.