On its daily chart from Hitbtc, it can be seen that dogecoin price is gradually treading lower, creating a descending channel on the longer-term time frames. At the moment, the cryptocurrency is testing the channel bottom against bitcoin and may be due for a quick bounce higher if support holds.
- Dogecoin price has made long spikes around the channel support, suggesting that buyers are keen on making the bottom of the range hold.
- The longer-term moving average is treading below the short-term moving average, which means that the downtrend is likely to stay intact.
- Stochastic is moving higher right between 60 and 80, indicating that upside momentum is present and might be enough to lead to a move back to the channel resistance at 65 satoshis.
- The middle of the channel might hold as an area of interest and keep price gains in check. This is around the moving average dynamic resistance at 55 satoshis.
- If stochastic starts indicating overbought conditions, dogecoin price could go for another test of the channel support at 40 satoshis and possibly push for a strong breakdown if selling pressure picks up.
A break below the channel support around 40 satoshis would lead to a sharper selloff for the cryptocurrency pair, especially if bitcoin prices start to recover. The path of least resistance is to the downside, as dogecoin price has been unable to gain traction since September last year.
Conclusion
Dogecoin is still on a steady long-term downtrend and is testing the support of the descending channel on its daily chart. The long spikes around support indicate that a bounce back to the top of the range is still possible, but technical indicators such as the moving averages and stochastic suggest that further losses are likely. The top of the channel and the area of interest in the middle might hold as near-term resistance.
