Dogecoin: Is taking short positions really the way to go
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Battered, bruised, and possibly overshadowed by its smaller counterparts, Dogecoin has had a rough month and a half. Since mid-August, the meme coin leader has shed nearly 45% of its value after slipping below key levels. Moreover, a descending triangle breakdown and a possible throwback to the lower trendline exposed DOGE to further drawdowns in the coming days.
If sellers are able to push the crypto below the demand zone of $0.155-$0.175, the market will see severe bleeding.
Dogecoin Daily Chart
Even though Dogecoin presented a glimmer of hope in August, the crypto’s price was immediately rejected above its 23.6% Fibonacci level. A resulting descending triangle breakdown triggered yet another drawdown after bulls were unable to maintain DOGE above $0.232.
Since a throwback was in effect at press time, the market seemed to be extremely vulnerable to a decline towards $0.155-$0.175. Ideally, this demand zone would offer a platform for buyers to step in and respond to selling pressure. However, with the current lack of retail interest in the market, it is unlikely whether the demand zone would be able to offer any support.
If DOGE does close below this area, losses could extend up to $0.087 or even $0.065, before a bullish response is observed.
It was not surprising to see some weak observations across DOGE’s indicators. The candles traded below their EMA Ribbons and this attracted more sell signals in the market. The Ribbons also flashed a few crossovers over the past few days and pointed to the onset of a bearish trend.
Moreover, the RSI and Awesome Oscillator moved in bearish zones. Ergo, the selling pressure can be expected to trump any chances of a bullish revival.
Based on the aforementioned factors, Dogecoin can be expected to trend lower over the coming weeks. Levels such as $0.087 and $0.065 might even become a reality if losses are not contained between $0.155 and $0.175.
For bulls, an ideal chance to buy DOGE would be within the aforementioned demand zone. However, longing DOGE at any price level does carry a lot of risks. Taking short calls would be the way to go right now.