Dogecoin Analysis August 2024: Falling Wedge Breakout Potential?

The price of Dogecoin (DOGE) witnessed significant fluctuations in July, driven by a mix of positive and negative market news. On the bullish side, former President Donald Trump’s endorsement of cryptocurrencies provided a boost to market sentiment. However, this optimism was countered by major selloff scares, including the German government’s $3.12 billion Bitcoin dump and a similar threat from Mt. Gox creditors.

As a result, Dogecoin, like its top crypto rivals, finished July at modest losses. The first two daily sessions of August have not been any different, with DOGE prices down 5.32% month-to-date to $0.119.

Are there more declines ahead for Dogecoin in August 2024? Let’s discuss.

DOGE’s Falling Wedge Pattern Hints More Losses Ahead

The daily chart for DOGE/USD reveals a falling wedge pattern, typically considered a bullish reversal signal. The wedge is formed by two descending, converging trendlines. The price has been squeezing within this pattern, indicating a potential breakout as the convergence point nears.

As of Aug. 2, 2024, DOGE has reached just halfway of its falling wedge pattern, with its apex down about 33% at $0.0786. In other words, the cryptocurrency has more room to decline before it attempts a bullish reversal from the wedge pattern.

Instead, for August 2024, DOGE’s interim support target appears at a confluence comprising its wedge’s lower trendline and the 0.786 Fibonacci retracement level. These levels align with the $0.105-0.093 range, down approximately 8.5-19.5% from the current price levels.

A reversal—after or ahead of testing the levels within the said support range—could take the DOGE’s price toward the wedge’s upper trendline at around $0.119, up about 2.5% from the current price levels. This upside target for August served as support in May 2024 and throughout the June-July 2024 session.

Dogecoin On-Chain Analysis: Richest Investors Are Accumulating

Dogecoin’s recent price declines have served as buy-the-dip opportunities for its richest investors, also known as “whales.”

According to data analytics platform Santiment, the Dogecoin supply held by entities with over 1 billion DOGE tokens (gray) has increased since July 20. In the same period, the DOGE supply held by those with a 100 million—1 billion token balance (teal) has decreased. DOGE’s price dropped 8.70% in the same timeframe.

The decrease in supply among those holding 100 million to 1 billion DOGE could indicate profit-taking, redistribution of tokens, or accumulation aimed at moving into the upper cohort of holders with over 1 billion tokens.

This accumulation by the largest holders is often seen as a bullish signal, as it reflects confidence in DOGE’s future potential. These entities likely have the resources and market insight to make informed decisions, and their increased holdings can signal a positive outlook.

Dogecoin Fundamentals: Consolidation Trend Ahead of Potential Rate Cut Next Month

From the fundamental analysis perspective, Dogecoin may consolidate above the $0.105-0.093 range for the remainder of August as investors await more clarity on the Federal Reserve’s decision on interest rates in September.

Federal Reserve Chair Jerome Powell, during his July 31 conference, hinted at the possibility of a rate cut in September, stating that they are “closely monitoring economic indicators” and remain prepared to adjust their stance “to support sustainable economic growth.”

In other words, Powell wants to see more cooling inflation and robust job growth before eventually slashing rates. This impasse has reduced bond traders’ bets about a 25 basis points rate cut in September from around 88% a week ago to 68.5%.

Any improvement in the rate cut outlook may send DOGE’s price to the wedge’s upper trendline target. Otherwise, the memecoin may just float above the support confluence range in August, as discussed above.