Dogecoin recovers December losses – Here’s why a breakout is likely
Dogecoin was trading within a local supply zone that stretched back to late November, which could force a price pullback.
Dogecoin [DOGE] fell below a two-week range formation at the end of December but made a V-reversal.
At the time of writing, it was challenging the highs from December and could see a much bigger rally than it had already witnessed.
Dogecoin fell below the $0.13 low in December. This had been a low that the memecoin previously visited in April, before rebounding higher.
January saw DOGE prices take a quick upward turn, but there was no denying the longer-term trend.
The OBV and CMF showed that the selling pressure in recent weeks has begun to ease. Demand needs to be sustained to bring about Dogecoin’s uptrend.
The DMI also signaled a strong downtrend in progress, but it too was relaxing.
Consider the downtrend in its depths in the first week of April. A month later, DOGE had rallied above the previous lower high at $0.205, set in March.
By mid-May, the $0.250-$0.265 supply zone from February was tested, even though the CMF remained below +0.05.
This highlights how memecoin rallies tend to be quick, and traders need to change their bias quickly to catch these impulse moves.
Managing the bullish DOGE expectations
Investors cannot expect Dogecoin to set new all-time highs or reach $1 in the coming months. The more likely scenario to unfold is a rally to the local highs, such as $0.21 and the $0.275-$0.290 supply zones.
The sellers could take control afterward, especially if the Bitcoin [BTC] momentum falters, setting a macro lower high as part of a bear market.
Traders’ call to action – Buy
Though not immediately. Dogecoin was at a local supply zone that stretched back to late November, which could see a price pullback. The technical indicators were strongly bullish on this timeframe.
Bulls can use a breakout past $0.156 and a subsequent retest to buy DOGE. Alternatively, a pullback to $0.135-$0.140 would also offer a buying opportunity.
The $0.185 and $0.210 levels would be the next targets following a breakout, while a price drop below $0.124 would invalidate the bullish bias.
Final Thoughts
- The Dogecoin rally could go as high as $0.3, even though the 3-day structure was technically bearish at the time of writing.
- Bulls can wait for a minor price dip to $0.135 to buy, or use a breakout past $0.156 as confirmation of buyer dominance.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
