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Dogecoin ($DOGE) has remained bullish, with the current price pushing the price to a high level of $0.41600.
However, the recent bullish run has positioned $DOGE above the overbought level, above 70, thus suggesting a pullback.
Strong Uptrend and Overbought Conditions For Dogecoin
Dogecoin has been bullish, and since the beginning of November, the Dogecoin price has risen at a fast pace.
This rally has taken $DOGE beyond the upper Bollinger Band. It shows strong buying pressure while at the same time, the asset may be overbought.
The Relative Strength Index (RSI) has climbed even higher to 91.44 and this level is way above the overbought level which means that $DOGE could be in for a slight market correction.
The upper Bollinger Band is often used as an overbought signal. This means that if the price is traded above it, it may experience some resistance.
However, a consolidation period is usually observed to let the asset maintain its position before regaining the upward shift.
A pullback to the middle Bollinger Band, near $0.20385, would give $DOGE a chance to consolidate before it can move upwards again.
Immediate resistance is around the recent high of $0.41600. Here bearish selling pressure might emerge if $DOGE’s price fails to surge higher.
The first support levels to focus on are $0.35737. It is close to the current price, and the middle Bollinger Band at $0.20385 if a deeper pullback occurs.
Analyst Highlights Bull Flag Pattern and $0.35 Support Level
At a short-term scale, analyst Ali points out that Dogecoin is forming a bull flag pattern so there is a possibility of a higher price.
On shorter time frames, #Dogecoin $DOGE shows a bull flag. If the $0.35 support level holds, this pattern suggests a potential 45% increase, targeting $0.56. pic.twitter.com/qrX39K65EA
— Ali (@ali_charts) November 13, 2024
The formation process of the bull flag pattern involves forming an upward surge. Then there is a sideways correction within a falling pattern before the final surge.
Such a structure suggests that buyers may be setting themselves up for the next upward move. That is if $DOGE is indeed going to breach the consolidation zone.
$0.35 can be considered as the key support level for this pattern. Holding above $0.35 would confirm the bull flag and a sustained buying interest in $DOGE.
However, a break with price below the level may destroy the bullish outlook thus leading to more decline and invalidation of the pattern.
If the price support area is firm and $DOGE breaks above the flag, Ali has set a possible price increase of 45% at $0.56.
This target is based on the height of the initial rally and points to a significant rally if the bull flag plays out as expected.
Traders should watch out for a breakout above the flag’s upper trendline, followed by high trading volume, as a breakout signal indicating the continuation of the upward trend.