Dogecoin (DOGE) continued to be under pressure this week as its weekly Relative Strength Index (RSI) fell to levels seen only just a few times within the asset's trading history. The signal has historically emerged in periods of prolonged selling moderately than short-term periods of volatility.
Crypto analyst Cryptollica noted that DOGE's weekly RSI has fallen to around 33.6, a spread that has only occurred 4 times within the last 11 years. Unlike short-term RSI signals, which might fluctuate quickly, weekly readings are likely to reflect ongoing market conditions and general trend exhaustion.
Source: X
At the time of writing, Dogecoin was trading at around $0.129, down within the mid-single digits on the day.
Why a weekly RSI is more vital than short-term signals
The Relative Strength Index measures momentum by comparing recent gains and losses. On higher time frames, comparable to the weekly chart, the RSI is usually used to measure whether selling pressure is lasting long enough to push the market into an oversold condition.
In the case of DOGE, a weekly RSI near the low of 30 suggests that sellers have controlled the value movement for an prolonged time period. This is different from short intraday declines, which might reverse quickly without affecting the general trend.
However, an oversold weekly RSI doesn’t indicate an instantaneous price bottom. In the past, such signals appeared early in periods of stress, with price stabilization or recovery occurring much later.
Further reading: Dogecoin (DOGE) falls to one-year lows despite increase in ETF registrations
How DOGE behaved during past RSI extremes
The previous instances of Dogecoin's weekly RSI entering this range occurred during significant market shocks.
In May 2015, DOGE was trading for fractions of a cent on account of weak liquidity and declining community engagement. The market remained subdued for an prolonged period before finally participating within the 2017-2018 crypto cycle.
The same signal occurred in March 2020 when global markets experienced a pointy sell-off initially of the COVID-19 crisis. DOGE was trading near $0.0015 on the time. Although the value didn’t immediately recuperate, a robust revaluation occurred the next yr throughout the broader crypto bull market.
The most up-to-date historical event occurred in June 2022, throughout the peak of the crypto bear market. DOGE traded near $0.053 before later regularly recovering, accompanied by improving market conditions and renewed speculative interest in meme-linked assets.
These examples show that the RSI signal often coincided with periods of strong downward pressure, however the timing of a recovery varied significantly.
The current context is different from previous cycles
Unlike previous cycles, the present market backdrop includes aspects not present at previous RSI extremes. DOGE is now actively traded across spot, futures and exchange-traded products, with participation split between retail traders and derivatives markets.
Recent sessions didn’t show any net inflows into US spot Dogecoin ETFs, although futures activity and short-term trading volume increased. This suggests that current price behavior is driven by speculative positioning moderately than long-term capital allocation.
Source: SosoValue
At the identical time, the overall crypto sentiment stays mixed, with risk appetite various amongst altcoins.
A weekly RSI near historical lows can illustrate changing risk-reward dynamics, but alone doesn’t predict direction. Oversold conditions can last for weeks or months if selling pressure persists or overall market conditions remain weak.
For DOGE, the signal indicates increased market stress moderately than a confirmed trend reversal. Any meaningful shift would likely require price stabilization, improvement in market structure and confirmation through volume or capital flows.
