Dogecoin forms a rounding floor on the daily chart, what happens next?

dogecoin analysis

As sentiment turns risky against expectations, crypto markets are experiencing a period of buoyant activity. Cardano leads the large caps, up 31% over the past week. But somewhat surprisingly, Dogecoin follows suit, gaining 16% over the same period.

USD DOGE is trending downward after peaking at USD 0.76 in May 2021. The price hit a local bottom on February 24, 2022, marking a 10-month peak-to-trough move with a downward swing of -87%.

The loyal Dogecoin community has continued to memorize their woes all along. However, will their patience be rewarded with the technical data signaling a turnaround?

Dogecoin Analysis

Dogecoin has closed its last three consecutive daily candles in the green, with Thursday on track to do the same. On Wednesday, there was a touch of the 50-day moving average, before dropping back down to end the day slightly lower.

Source: DOGEUSD on TradingView.com

Today is a moderate break from the 50-day moving average line as $DOGE gains 5% at the time of writing.

The Relative Strength Index (RSI) has risen sharply since Monday, from 44 to 63, pointing to strong buyer momentum. However, RSI resistance is found at the 66 level, established on Jan 14 when $DOGE reached USD 0.22.

Interestingly, further analysis shows that the price chart is forming a rounding floor. This pattern generally signals a positive reversal in sentiment and the end of a prolonged downtrend.

“Rounding bottoms are found at the end of prolonged down trends and indicate a reversal in long-term price movements.”

Once the move is complete, a breakout usually follows and should continue in a new uptrend.

Dogecoin now available at crypto ATMs

Technical analyst CryptoSoap expects price action to develop head and shoulders. A rupture of the falling wedge will see a bullish retest of the wedge line before moving higher.

The forecast was justified on the basis of low volume, which is interpreted as a lack of selling pressure.

Source: DOGEUSD on TradingView.com

In recent times, the story has turned away from meme coins. However, Dogecoin is trying to redefine itself as a (serious) payment token.

To support this venture, Coinflip announced this month that it is adding Dogecoin to its network of 1,800 ATMs. Co-founder of Coinflip Daniel Polotsky said $DOGE is growing in popularity and his company is committed to supporting the project.

“Given its growing popularity and recent mass adoption, we are committed to ensuring Dogecoin is part of our portfolio of coins, and encourage further support for this cryptocurrency in the coming months.”

While the signs point to a trend reversal, traders should continue to keep one eye on Bitcoin and the macro landscape.

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