Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Very few buy opportunities have been presented in the Dogecoin market. Trading at a 73% discount from its May all-time high, DOGE has been picked apart by short-sellers who have capitalized on weakening metrics on all fronts.
Over the next week, the major support line of $0.160 would be under tremendous pressure to fuel a rally. If sellers continue their relentless assault, another 50% plummet to February levels would be possible.
At the time of writing, DOGE was trading at $0.201, down by 3.4% over the last 24 hours.
Dogecoin Daily Chart
Source: DOGE/USD, TradingView
Dogecoin’s daily chart offered a buffet of bearish signals. Firstly, the candles traded below their daily 20, 50, and 200 Simple Moving Average lines. Not only do such readings attract short-selling, but also dissuade buyers from taking up long positions.
Secondly, a death cross was just around the corner, one which exposed the market to another major sell-off. Moreover, retail traders have sought different options rather than testing their luck with Dogecoin. Data from Santiment highlighted that its trading volume has remained in the $1-$2 billion range lately, as opposed to the $5-$7 billion range seen during rallies.
Now, keeping these factors aside, the Visible Profile suggested that DOGE was still trading within its developing value range of $0.455 and $0.17. As long as DOGE maintains above the lower end of this range, a complete blowout can be avoided.
A minor rally seemed possible as investors mop up DOGE at the $0.16-support. However, a close below $0.16 would open the floodgates for an extended fall. The next immediate support lay at $0.087. This meant that DOGE would decline by another 43% before buyers can respond.
Reasoning
Of late, Dogecoin has been trending lower after a descending triangle breakdown. A throwback to $0.232 can be expected to transpire into further losses towards $0.16. Naturally, DOGE’s indicators flashed alarm bells. The RSI was close to the overbought zone and suggested some more weakness before a reversal.
The Awesome Oscillator and MACD also maintained movement below their respective half-lines due to market weakness.
Conclusion
Apart from a few scalping opportunities, short-selling seemed to be the most viable trading strategy in the Dogecoin market.
Although shorting at DOGE’s press time level would not be a bad call, a safer bet can be placed once DOGE closes below $0.16-$0.17.
