Popular cryptocurrency analyst and trader, Crypto Daily Trade Signals, has published a warning to the Dogecoin community about potential downside risk for the popular meme-inspired crypto asset as it faces a bearish technical pattern amid broader negative sentiment in the digital asset market of late .
Dogecoin forms a bearish descending triangle pattern
Crypto Daily Trade Signals analysis looks at DogecoinThe current market structure, identifying the formation of a descending triangle pattern. The descending triangle is characterized by a series of lower highs pushing against a flat support level which currently sits at $0.121, and is generally considered a bearish continuation signal.
According to the expert, although the triangle base at $0.121 provides strong support for DOGE, the current bearish market conditions caused by Bitcoin, the largest cryptocurrency asset, may render it useless. Additionally, he noted that after testing the support level about three times, investors are hoping that the level holds this time.
The message said:
DOGE price was previously moving inside a giant descending triangle. The base of the triangle provides strong support for DOGE, but the bearish market conditions created by Bitcoin may render it useless. The support has already been tested three times and investors are hoping that it will now hold up.
Crypto Daily Trade Signal also highlighted another bearish trend in asset prices, which is indicated by DOGE trending below the 50-day and 200-day simple moving average (SMA).
It is important to note that descending triangles are generally not bullish, but when they resolve higher, they usually trigger an explosive rally. In the event of a rebound at this price level, the analyst estimates DOGE could break out of the existing market structure and reach $0.237. However, the bullish trajectory of crypto assets might not be easy as daily crypto trading signals highlighted two crucial resistance levels at $0.182 and $0.206.
Meanwhile, if the crypto asset fails to rebound and falls below the base of the triangle, the expert predicts a decline towards the $0.96 price level and even further to the $0.072 level in the coming days.
Growing pessimism from investors
Given that Dogecoin is struggling to regain ground, this technical analysis comes at a crucial time for the piece of money. The general market decline has exacerbated the difficulties, as investors continue to lose confidence in the near-term potential of cryptocurrencies.
As DOGE continues to navigate this descending triangle, the next few days will be crucial in deciding whether the asset can withstand bearish pressures or give in to a more severe decline.
At the time of writing, DOGE has sparked positive sentiment, trading at $0.125, demonstrating an increase of 2.79% over the past day. Although its market capitalization increased by over 2%, its trading volume declined by over 34% over the past day. The current bullish momentum seen in the coin market suggests that DOGE may be able to attract more gains in the days to come.
Featured image of Adobe Stock, chart from Tradingview.com
