Dogecoin, the largest meme token backed by Tesla CEO Elon Musk, has been showing a stagnant performance recently.
However, DOGE may soon witness a volatility spike.
Popular cryptocurrency analyst Ali Martinez claimed in his post that there may be an increase in Dogecoin volatility.
At this point, the analyst examining the Bollinger Bands on Dogecoin's 4-hour chart said that DOGE has experienced the tightest squeeze since October 2023 and the band gap has narrowed.
The analyst stated that volatility in the DOGE price will increase as a result of this squeeze.
“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 are Bollinger Bands?
These bands, named after their inventor John Bollinger, are a popular technical analysis tool that shows whether the price of any financial asset is high or low.
Bollinger Bands indicate that an asset is in an overbought or oversold zone. When the price of the asset moves towards the upper band, this usually indicates overbought, when the price moves towards the lower band, this usually indicates oversold.
Historical data reveals that narrowing between the bands indicates that the price is consolidating within a certain range and that such narrowings precede dramatic price movements.
What Awaits Dogecoin?
Accordingly, the direction in which Dogecoin will move will be determined by its post-tightening movements.
Because DOGE may fall below the Bollinger band due to the high volatility that will occur after the tightening and then experience a significant price decrease.
Or DOGE may break the upper band and raise the price to new highs.
While the upcoming volatility spike is an element of uncertainty for the DOGE price, investors are expecting significant price changes in the DOGE price.
At this point, it is unclear whether Dogecoin will experience an upward rally or a downward decline, and investors are curiously watching in which direction DOGE will move.
*This is not investment advice.