Technical analysis of the Dogecoin price shows that the meme coin might be gearing up to outperform the market this month. Particularly, technical analysis of the Dogecoin/Bitcoin pair shows that an interesting bullish pattern has just emerged that could send Dogecoin on a journey to creating a huge bullish candle and a strong uptrend throughout the entire month.
Double Bottom Pattern: A Bullish Setup For Dogecoin
Dogecoin’s price action has been marred by a decline in the past seven days. This notable price decline has seen DOGE retesting the $0.3 price level again with threats of breaking to the downside. It has only been two days into February, and the Dogecoin price has already declined by about 7% from its monthly open. Despite this, technical analysis shows that DOGE might actually outperform all other cryptocurrencies this month.
The positive outlook for Dogecoin was revealed through an interesting analysis by crypto analyst Trader Tardigrade. What makes this analysis particularly intriguing is that it not only examines Dogecoin’s price action in isolation but also considers its performance against Bitcoin.
Trader Tardigrade highlighted the formation of a double bottom neckline on the DOGE/BTC chart, suggesting that Dogecoin has established a strong base for a potential breakout. The double bottom is a bullish setup that signifies a reversal from a downtrend to an uptrend and indicates a strong support level at the double bottom point.
In the case of the DOGE/BTC pair, this double bottom has formed the monthly candlestick timeframe. Trader Tardigrade compared this structure to Dogecoin’s price behavior in March 2021, when a similar setup preceded an explosive rally. During that cycle, Dogecoin gained substantial momentum against Bitcoin, printing a massive green candle in April after securing strong support at the neckline.
If history repeats itself, Dogecoin could be on the verge of another impressive surge, potentially outshining other cryptocurrencies in the market this month. According to Trader Tardigrade’s projection, this could see the DOGE/BTC pair trading at $0.00002200 by the end of February. If Bitcoin were to keep trading at its current average price of $100,000, this would put the Dogecoin price around $2.2 by the end of the month.
Image From X: Trader Tardigrade
Bullish Divergence On Daily RSI Hints At Momentum Shift
Beyond the monthly chart setup, Trader Tardigrade also pointed to a bullish divergence forming on Dogecoin’s daily Relative Strength Index (RSI). In his analysis, he noted that while DOGE has created a new lower price, the RSI has printed a higher low. This divergence signals a potential shift in momentum, indicating that selling pressure may be fading and an uptrend could be in the making.
RSI divergences often precede trend reversals, and in Dogecoin’s case, the higher low on the RSI suggests buyers could regain control very soon despite recent price declines.
Speaking of price declines, Dogecoin has been down by 6.7% and 14.3% in the past 24 hours, respectively. At the time of writing, Dogecoin was trading at $0.2922.
Featured image from Getty Images, chart from TradingView
Source: NewsBTC