Analyst Warns of Bearish Divergence for Dogecoin Amid Weak Volume

• Alan Santana suggests Dogecoin may face a correction as technical indicators show a hidden bearish divergence.
• Despite 19 days of bullish action, low trading volume for Dogecoin indicates potential weakness in the current trend.

Dogecoin has gained notice due to bullish momentum, which has piqued the interest of both traders and analysts. As Alan Santana, a well-known crypto analyst on TradingView, notes, Dogecoin might be about to break through as it gets close to a crucial threshold.

Examining the latest price swings, Santana asked, “Will it break $0.22888?” He noted that since its bottom on August 5, 2024, DOGE has clearly shown a bounce. After some months of consolidation, the coin is steadily rising. But what distance can it cover?

Dogecoin Faces Bearish Signals Amid Weak Volume and RSI Divergence

Santana’s analysis is not entirely hopeful either. He pointed out some alarming technical signals, particularly a concealed bearish divergence on the RSI ( Relative Strength Index) along with overbought readings.

The RSI suggests that the market might be overextended even as the price has been rising. Usually, this difference points to slowing down momentum, which could cause a decline in price.

Furthermore, even after 19 days of strong activity, Dogecoin’s trade volume stays low. Santana said, “With this much positive action, we would expect to see more volume,” noting that low trading volume sometimes indicates underlying trend weakness.

Unless volume rises noticeably in the next few days, this could restrict the upside potential of Dogecoin. Comparatively to the top in May, the present lower high also points to the possible end of this positive wave.

“Buy at support, sell at resistance,” Santana said in closing, suggesting that the chart configuration calls for a correction.

Meanwhile, DOGE is swapped hands at about $0.1733 at the time of writing, it has gained 5.13% over the last 24 hours and 23.64% over the last 7 days.

On the other hand, it’s important to keep in mind that outside events frequently affect the price of Dogecoin, particularly with respect to its most well-known advocate, Elon Musk. CNF previously reported that historical price swings in Musk’s tweets on Dogecoin had been rather notable.

Historically, his meme postings have sparked enthusiasm among the Dogecoin community, which has driven more trade and a price jump. Musk’s latest post of a Dogecoin meme caused the price to soar, and shortly after transaction volume doubled.