Dogecoin Bollinger Squeeze Indicates Major Price Shift, Analyst Cautions
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Recent analysis from an independent technician highlights what is termed a “Bollinger Band squeeze” for Dogecoin, suggesting that significant volatility may be imminent.
Dogecoin Bollinger Bands Indicate Major Movement
A chart from May 21 reveals Dogecoin priced at $0.22967, with its 20-period simple moving average slightly lower at $0.22717. The upper and lower bands are recorded at $0.24260 and $0.21175, respectively, indicating a constrained trading range of about three cents and a mere 13.6% difference between the two extremes—the narrowest this spread has been since early April.
The chart illustrates a series of volatility surges and subsequent contractions. Following May 6, Dogecoin broke through a month-long base, climbing from the mid-$0.16 range to approximately $0.26. This surge expanded the bands to their widest levels in six weeks. Since then, Dogecoin’s price has experienced a gentle decline but, crucially, has maintained its position above the 20-SMA. Dips into the $0.21 region have been stabilized, establishing increasingly higher lows and transforming the 20-SMA into an active support level.
Further Insights
As the bands tighten, traders are monitoring the key inflection points indicated. A strong close above the upper band at $0.243 would propel the price into uncharted territory, revealing potential resistance around the recent peak at $0.27 and beyond.
On the other hand, a move through the lower band at $0.212 would invalidate the current positive price structure, likely dragging Dogecoin down to the psychological level of $0.20, aligning with May’s lower trading zone near $0.16. Until either boundary is breached, the ongoing squeeze continues to capture attention. The analyst aptly notes, “Bollinger band squeezing, preparing for the next significant move.”
Further Insights
Potential Breakout for DOGE Channel
Looking at the daily chart, Dogecoin’s behavior since its peak in November 2024 has been contained within a broad descending channel, with the upper boundary now moving through the $0.24 range. The price is currently situated just below this upper limit at $0.231, closely aligning with the 61.8% Fibonacci retracement level from the November high to the mid-March low ($0.234).
This convergence establishes a strong resistance level: a daily close beyond this point would not only signify the first breach of the seven-month channel but would also restore the “golden ratio,” an event known to accelerate trends historically.
If bulls can achieve a close above the trendline and the 0.618 Fibonacci level, the next point of interest would be the 0.5 retracement at $0.2824. Following that, targets at the 0.382 retracement of $0.3300 and the 0.236 retracement at $0.3890 outline potential higher objectives within the channel’s former confines.
On the contrary, failing at this level would lead to a well-defined support structure: the 200-day EMA at $0.217, the 100-day at $0.207, and a cluster near the 0.786 Fibonacci at $0.1669. A decisive breach of these support levels would invigorate bears enough to revisit the March low of $0.13.
Featured image generated with DALL.E, chart sourced from TradingView.com
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