Dogecoin eyes 'oversold' bounce as DOGE price gives up 90% of yearly gains
Dogecoin (DOGE) shows the prospect of undergoing a strong price rebound after reaching a technical support confluence on May 12.
DOGE's 45% price drop to $0.065 this week, or a 90% decline from its record high of $0.76 a year ago, was met with decent buying sentiment. As a result, the token underwent a modest price rebound on May 12, rising over 10% to $0.078.
Interestingly, Dogecoin's upside retracement move started near a confluence of two support levels: a multi-month downward sloping trendline and a horizontal line that preceded a 335% price rally in the week ending April 19 last year.
Meanwhile, the falling trendline is part of a broader descending channel pattern. Its multiple retests as support in the last 12 months propelled DOGE's price toward the channel's upper trendline. If the pattern repeats, Dogecoin's rebound will stretch toward the upper trendline near $0.1, up almost 25% from May 12's price.
The upside setup also picks cues from Dogecoin's daily relative strength index (RSI), now near its oversold threshold of 30 — a buy signal.
Conversely, a decisive move below the confluence support risks sending DOGE to $0.04, which has served as a strong support level in the Feb-April 2021 session. That would mean another 40% price decline before the next potential rebound.
The latest bout of selling in the Dogecoin market coincides with similar sentiment in the overall crypto and traditional markets, led by the Federal Reserve's decision to tighten monetary policy aggressively to curb rising inflation.
Dogecoin, much like its top-ranking rivals Bitcoin (BTC) and Ethereum (ETH), has also been hit by the panic around the de-pegging of two popular stablecoins: TerraUSD (UST) and Tether (USDT).
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