Popular cryptocurrency analyst Ali Martinez claimed in his post that there may be an increase in Dogecoin volatility.
Dogecoin, the foremost meme token supported by Tesla CEO Elon Musk, has displayed a period of stagnation in its recent performance. Nevertheless, DOGE could soon encounter a spike in volatility.
According to a post by renowned cryptocurrency analyst Ali Martinez, Dogecoin’s volatility could be on the rise. Martinez, who examined the Bollinger Bands on Dogecoin’s 4-hour chart, noted that DOGE is currently experiencing its most constricted range since October 2023, with the band gap narrowing.
The analyst mentioned that the tightening of the Bollinger Bands will lead to increased volatility in the price of DOGE.
“Bollinger Bands on the four-hour Dogecoin chart are experiencing the tightest squeeze since October 2023, signaling an impending rise in DOGE price volatility.”
What do Bollinger Bands represent?
Bollinger Bands, coined after their creator John Bollinger, serve as a widely-used technical analysis tool to assess whether the price of a financial asset is at a high or low level. They signal whether an asset is in an overbought or oversold condition. When the price of the asset approaches the upper band, it typically signifies overbought conditions, while movement towards the lower band indicates oversold conditions.
Historical data indicates that a reduction in the gap between the bands suggests that the price is consolidating within a specific range, and such reductions often precede significant price fluctuations.
What lies ahead for Dogecoin?
Hence, the subsequent movements of Dogecoin following the tightening will dictate its direction. Given the anticipated high volatility post-tightening, DOGE might dip below the Bollinger band, potentially leading to a substantial price decline.
Alternatively, DOGE could breach the upper band, propelling the price to unprecedented levels.
Although the imminent surge in volatility introduces an element of uncertainty to DOGE’s price, investors anticipate notable fluctuations in its value.
Presently, it remains uncertain whether Dogecoin will embark on an upward surge or face a downward trajectory, leaving investors eagerly monitoring its direction.
