This article is available in Spanish.
Dogecoin (DOGE) has recently experienced a staggering rally. In eight days, DOGE rose almost 200%, reaching a local peak of $0.4385 on Tuesday. This explosive growth pushed the daily Relative Strength Index (RSI) to almost 93, indicating a strongly overbought environment.
Since then, the Dogecoin price corrected by 19% and was trading at $0.37 at the time of writing. However, according to crypto analyst Kevin (@Kev_Capital_TA), who has gained a lot of attention on X for his Dogecoin price analyses, the correction phase may not be over yet. In one series of updates, Kevin discusses how low Dogecoin can go before resuming its upward trajectory.
How Low Can Dogecoin Go?
“My first price target and a level we want to maintain for Dogecoin is the $0.30-0.26 range, which is the golden pocket retrace levels,” said Kevin. “That is a correction of 30-40% compared to the local top, which is a perfect correction in a bull market.”
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Kevin further explained the significance of RSI levels in predicting market movements. “A healthy correction/consolidation of 1-3 weeks to cool down the indicators would be the most beneficial thing that can happen to Dogecoin. It happened several times on the way up in 2020-2021,” he noted. “My view is still that this is happening quickly, based on the technical data I’m looking at.”
Drawing parallels to the previous bull market, he added: “In the 2020-2021 bull market, Dogecoin reached 90+ on the daily RSI three times, each time marking a local top or consolidation period before the next surge. We just hit 90+ for the first time on the daily RSI, indicating we may have another 1-2 lead in this bull market before we find the macro top. PS: The second and third stages were both bigger than the first stage.”
On the lower time frames, Dogecoin price action formed a symmetrical triangle, a chart pattern often associated with consolidation periods that precede significant price movements. Kevin commented: “I follow this strange symmetrical triangle of Dogecoin. Honestly a 50/50 which way this breaks. I am still in favor of the correction because the daily RSI is 90+.”
The symmetrical triangle can serve as a continuation or a reversal pattern depending on market conditions. For the Dogecoin price, the breakdown of the triangle is consistent with Kevin’s expectation of a correction due to overbought RSI levels.
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To estimate the potential size of the price drop following the breakup of the symmetrical triangle, traders measure the height of the base of the triangle – the widest part of the formation. This measurement is then projected downward from the point of breakdown, creating a target for the price movement.
Applying this method to Dogecoin suggests a correction towards the $0.28 price level, which closely aligns with Kevin’s analysis that focuses on the $0.30-$0.26 range. “It looks like the correction I’ve been asking for over the last few days is starting on Dogecoin,” Kevin confirmed after observing the market movement. “We can’t go straight up, folks. Dips are healthy and reset the indicators so we can go higher. Hopefully no one will be mad at me anymore for telling the truth.”
At the time of writing, Dogecoin is trading at around $0.37, having recovered around 19% from its local high. The price seems to have found a temporary support at $0.35, but with the daily RSI only at 80 – still in the overbought area – a continuation of the correction cannot be ruled out.
“A healthy 1-3 week correction/consolidation to cool down the indicators would be the most beneficial thing that can happen to Dogecoin,” Kevin reiterated. “Happened several times on the way up in 2020-2021. My view is still that this is happening quickly, based on the technical data I’m looking at.”
Featured image created with DALL.E, chart from TradingView.com