Crypto experts are raising concerns about Dogecoin based on a warning sign in its price chart. Tech analyst Josh Olszewicz (@CarpeNoctom) has identified potential signs of a Head and Shoulders (H&S) pattern in the DOGE/USD 12-hour chart, suggesting that if this pattern is confirmed, Dogecoin’s price could experience a substantial decrease.
An H&S pattern is a well-known technical indicator in trading circles, interpreted as a bearish sign. It consists of three peaks: a central peak (referred to as the “head”) that’s taller than the other two, and two outer peaks (the “shoulders”), which are lower and roughly equal in height. The line connecting the bottoms of the two troughs (known as the “neckline”) can be flat or sloping, serving as a crucial support level.
Dogecoin Must Hold $0.14
On Dogecoin’s 12-hour price chart, the left shoulder and head of a Head and Shoulders (H&S) pattern have already formed. The right shoulder is currently developing. The important level to watch for this pattern is the neckline, around $0.14, marked by Olszewicz. A clear drop below this line might indicate a bearish trend as forecasted by the H&S formation.
An additional feature of the graph is the Fibonacci retracement levels, represented by horizontal lines. These lines suggest potential areas of support and resistance. Derived from the Fibonacci sequence, a well-known mathematical concept, these levels reflect consistent proportions found in mathematics and natural phenomena.
In this chart, the price level that is 0.5 times the Fibonacci sequence lies around $0.18, aligning with the left shoulder. The price level without any multiplier corresponds to the peak, which is approximately $0.23. These significant levels help identify potential areas for support and resistance in the market.
Olszewicz has pointed out a possible drop zone according to the historical trend of the H&S pattern. This pessimistic forecast is determined by measuring the distance between the peak of the head and the neckline, then projecting that downward from the breakout point. The green-marked target box indicates a potential decrease to around $0.10 to $0.09, which aligns with the 1.618 and 2.0 Fibonacci extensions. A slide to this extent may cause a dramatic price drop of approximately 40%.
The H&S pattern’s significance comes from its ability to indicate trend reversals. It becomes relevant once the price falls below the neckline after the right shoulder has formed. For both traders and investors, this pattern acts as a warning sign, indicating the possibility of impending price drops.
According to Olszewicz’s most recent chart, the neckline hasn’t been surpassed, and the head and shoulders pattern isn’t complete yet. Keep an eye on the $0.14 mark, as falling below it could trigger a sell-off, completing the predicted trend reversal. But until that happens, the pattern serves as a cautious warning sign instead of a confirmed trend reversal.
In essence, the price trend of Dogecoin may give pause to optimistic investors. Based on historical patterns, such as the emerging Head and Shoulders chart observed by analysts like Olszewicz, there could be an impending drop in Dogecoin’s worth. Nevertheless, a clear breach below the neckline is needed before this pattern can be confirmed, shifting cautious observers into bearish perspectives.
At press time, DOGE traded at $0.1509.
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2024-04-25 10:34