Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Buyers have been in the hunt for an important price level since 22 August and they have now been rewarded for their patience. Three consecutive green candles lined up on Dogecoin’s daily chart for the first time in over a week after buyers stepped in between $0.270-$0.280.
A rise above the weekly 20-SMA would inject further bullish sentiment from where some important levels would be targeted. At the time of writing, Dogecoin was valued at $0.302, up by 7.5% over the last 24 hours.
Dogecoin Daily Chart
Source: DOGE/USD, TradingView
Since making an upwards run to $0.35 on 15 August, Dogecoin seemed to have fallen silent. Low volumes pointed to a buying hiatus as retail traders looked elsewhere for gains. As a result, the price gradually descended within a falling wedge setup. The zone between $0.270-$0.280 was crucial for a reversal and buyers seemed to respond adequately.
A rise above the daily and weekly 20-SMA (red) could have a positive effect and spur additional buying going forward. A close above $0.38 would allow DOGE to set sight on $0.447, but certain conditions need to be met first.
On the other hand, low volumes are still plaguing the market. In the event of a correction, DOGE would need to hold above its 50-SMA (yellow) $0.270 to keep short-sellers away from the market.
Reasoning
The RSI witnessed a breakout from its descending channel and worked in favor of the buyers. However, the index needs to climb above 60 to log stronger gains in the coming days. The MACD also noted bullish progress as the fast-moving line moved closer to the signal line.
A favorable crossover usually stimulates more buying activity. Meanwhile, the Directional Movement Index witnessed a bullish crossover after some period of indecision. However, the ADX would need to rise above 25 for a strengthening uptrend.
Conclusion
Dogecoin registered a much-needed rally, but the price needs to make some more headway for an extended run. Firstly, DOGE needs to topple its daily and weekly 20-SMA (red). A close above $0.330 on strong volumes would be the next crucial step.
These conditions would allow DOGE to challenge its long-term target of $0.447.
