Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Dogecoin’s rise to crypto-glory made for a compelling story during the first half of 2021. Its year-to-date gains amounted to over 5,000% as the ‘meme coin’ cemented its position at the top of the crypto-ladder. However, many uncertainties lie ahead for the cryptocurrency as the second half of 2021 gets well underway.
In fact, at press time, Dogecoin was yet to recover from the 19th May sell-off and the formation of a descending triangle threatened deeper losses over the coming days.
Dogecoin’s 1-day chart
Source: DOGE/USD, TradingView
Dogecoin’s start to June could not have been better as the cryptocurrency posted gains of over 40% in the first two days alone. However, the narrative switched once again after a break above $0.447 was denied. Selling pressure dragged the cryptocurrency below multiple support levels as a downtrend emerged. This also led to a descending triangle and the lower trendline represented the support at $0.280. Conceding this level to the bears could have a damaging effect on DOGE’s price as a 11% decline seemed possible towards 23rd May’s swing low of $0.249.
Reasoning
While DOGE’s price was in a sensitive position and a move in either direction was possible, its technicals were shaping up to be increasingly bearish. The Relative Strength Index has been on a steady decline since 16 April. According to the upper sloping trendline, the index would remain below 50 and would likely reset in the oversold zone before shifting trajectory.
The MACD line was below equilibrium and the Signal line as bears maintained control. Squeeze Momentum Indicator noted a series of red bars as momentum seemed to accumulate on the sellers’ end. Going forward, DOGE’s success will hinge on its press time support of $0.280. Failing to cut losses around this zone would open the doors for an extended sell-off.
That being said, there was also a slight chance of a bullish comeback if $0.280 is successfully defended.
Conclusion
Dogecoin’s support at around $0.280 is imperative to its trajectory over the coming days. A breakdown from this level would likely trigger another 11% decline towards the 23rd May swing low of $0.249. However, there is also a small window of opportunity for the bulls if the $0.280 level is maintained over the coming days.
