Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
After touching record levels throughout April and May, Dogecoin suffered a massive decline of 70% on the back of a wider crypto-sell. A descending channel breakout offered temporary relief, but the bears have been dominant in the market of late.
Consistent selling over the last three weeks dragged the cryptocurrency towards its 200-SMA (green), a level where some buying resurgence was noted. At the time of writing, Dogecoin held the sixth spot on CoinMarketCap’s crypto-rankings and was being traded at $0.255, up by 8% in the last 24 hours.
Dogecoin Daily Chart
Source: DOGE/USD, TradingView
While a 60% hike over the last three days did lift Dogecoin from its recent woes, key areas were yet to be toppled. An important region of $0.298, which triggered a 40% decline last week, had flipped to resistance and had the potential to deny an extended rise. Interestingly, this area also clashed with the daily 20-SMA (red) and bolstered the region’s defenses.
A close above these levels could result in another 26% hike towards $0.365, but stronger cues are required for such an outcome.
Reasoning
While the market bulls seemed to be in command, the Relative Strength Index was denied a hike above 50 and remained in bearish-neutral territory. The Awesome Oscillator noted a bit of bearish divergence as the red bars rose below the half-line. There was some indication of bullish momentum, but not enough to warrant another price hike.
The Supertrend Indicator still flashed a sell signal but placed a stop-loss at just above the 20-SMA at $0.323. The Visible Range’s point of control also lay around this zone. With stiff resistance present at various levels on its daily chart, Dogecoin required stronger signals and a broader market flurry to rise above these areas. Failing to do so could drag the cryptocurrency back to $0.217 – An area that triggered DOGE’s 70% decline on 19 May.
Conclusion
A close above $0.284 could extend gains for Dogecoin, but its indicators were less supportive of an extended bullish scenario. Instead, the cryptocurrency could head south and back towards $0.217 before its next leg upwards.
