A cryptocurrency analyst has pointed out that Bollinger Bands are pressing on Dogecoin, suggesting that there may be volatility ahead for the memecoin.
Bollinger Bands have tightened on the Dogecoin Daily Chart
In a new after on X, analyst Ali Martinez talked about the latest trend in the Bollinger Bands for Dogecoin. The “Bollinger Bands” refer to a technical analysis (TA) tool that can be used to measure the volatility of a particular asset.
There are three ‘bands’ that make up the indicator: the asset’s 20-day moving average (MA) and two standard deviations above and below this MA. When these levels are close to each other, it means that the price has recently shown stable action. Likewise, the fact that the bands are far apart indicates the presence of volatility in the market.
In addition to serving as a gauge of volatility, the Bollinger Bands are sometimes used to assess overpriced or underpriced conditions based on how close the asset is to its standard deviation. If the price is near the high level, it could be a signal that the asset is overbought, while a price close to the lower level could indicate oversold conditions.
Here is the chart shared by Martinez showing how the Dogecoin Bollinger Bands have behaved recently in the one-day time frame:
As shown in the chart above, the Dogecoin Bollinger Bands have narrowed around the 1-day price, implying that the coin has not seen much sharp price action lately. It is generally believed that periods of low volatility end with sharp swings. So it’s possible that DOGE is primed for a burst of volatility right now.
As for where a big move resulting from this setup could take DOGE, it’s hard to say as the memecoin is currently trading right around the middle band, indicating that it is currently neither overpriced nor underpriced, at least from the perspective of the Bollinger Bands.
Dogecoin is not the only memecoin that has recently undergone TA development. As Martinez has emphasized in another X afterthe Tom Demark (TD) Sequential flashes a signal on the weekly PEPE chart.
The chart shows that Pepe has seen the completion of a TD Sequential setup after nine red candles, which could be a potential sign that the bearish trend may have reached a point of exhaustion. If this is the case, it is possible that the memecoin will subsequently experience an upward movement. According to Martinez, a goal for PEPE could be $0.0000050.
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At the time of writing, Dogecoin is hovering around $0.09, down almost 3% in the past 24 hours.