Crypto analyst Josh Olszevich is once again warning of a Dogecoin price crash. Analysis rests on the Ichimoku cloud, a comprehensive indicator that provides information on support/resistance levels, momentum and trend direction. Olszewicz’s analysis points to two specific technical events on the 1-day (1D) chart of the DOGE against the US dollar (DOGE/USD). Via X, he commented “1D DOGE: Bearish TK Cross + Bearish Kumo Breakout.
Bearish signals for Dogecoin
A bearish TK cross refers to a bearish crossover between the Tenkan-sen (transformation line) and the Kijun-sen (baseline) in the Ichimoku cloud system.
Tenkan-sen, which is a fast-moving line usually calculated as the midpoint of the highest high and lowest low over the past nine periods, is crossed below the Kijun-sen, a slow line calculated as the midpoint of the highest high and the lowest low. A 26-period low is considered a bearish signal.
This indicates that short-term prices are falling below the base level of prices last month, indicating a possible further downside.
Bearish Kumo Breakout: ‘Kumo’, which translates to ‘cloud’, is part of the Ichimoku cloud indicator and forms between two other lines: Senkou Span A and Senkou Span B. It represents a key area on the chart that can act as support or resistance.
In terms of Olszewicz’s analysis, a ‘bearish Kumo breakout’ means that the price has come down from the cloud. This breakout is seen as confirmation of a bearish trend. The fact that the price is below the Kumo indicates that the overall market sentiment for DOGE is negative, with the Kumo now acting as resistance to any upward price movements.
Olszewicz’s chart shows DOGE trading at $0.15 with a cloud plotted behind the price action, showing green above and red below the price. A cloud turning green represents future bullish potential, but a price below both the cloud and the Tenkan-Sen/Kijun-Sen crossover indicates current bearish conditions.
40% price crash?
This lends weight to Olszewicz’s previous DOGE price analysis. According to a NewsBTC report, a crypto analyst warned of a possible Head and Shoulders (H&S) formation on the DOGE/USD 12-hour chart that could be validated soon.
This formation is characterized by two shoulders flanking a particular head, the neck line being approximately $0.14 decisive. If the price of Dogecoin breaks below this critical support, the predicted H&S pattern will likely manifest, potentially triggering a sell-off towards the $0.10 to $0.09 area.
This target area aligns with the 1.618 and 2.0 Fibonacci extension levels, indicating a price crash of about 40% from the neckline. The pattern is yet to be confirmed, though with the price above the crucial support level of $0.14, its presence serves as a cautionary signal for the market.
The technical confluence of a bearish TK cross and a bearish Kumo breakout in Olzewicz’s recent analysis only reinforces the potential bearish scenario ahead for Dogecoin. Market participants are recommended to keep a close eye on the $0.14 level, as a decisive break below could validate the bearish outlook and set the stage for an expected decline.
At press time, DOGE traded at $0.1413.
Featured image created with DALL·E, charts on TradingView.com
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