While Dogecoin’s recent losses were at par with those of most top ten-ranked cryptos, it is important to understand its position, prior to the 7 September sell-off. Before the decline, prices were inching lower, after forming a peak at $0.35.
Even though higher levels were ripe for the taking, DOGE disappointed bullish observers as prices trickled back below the $0.30 and the 23.6% Fiboancci level. With retail traders taking lesser interest in the popular meme, DOGE had to climb past certain levels to attract more attention to its market. At the time of writing, DOGE traded at $0.247, down by a marginal 0.6% over the last 24 hours.
Dogecoin Daily Chart
Source: DOGE/USD, TradingView
A closer look at DOGE’s chart indicated that prices moved within a down-channel even after the recent sell-off. The pattern usually sees a break to the upside but there were chances of a breakdown if buyers fail to adapt quickly. A close below the bottom trendline could trigger another 11% decline towards a defensive area of $0.21. A decisive move beneath $0.232 would act as a precursor for such an outcome.
To negate this scenario, buyers would need to respond at the 200-SMA (green) and force a northbound move. Chances of a breakout upwards, would come to light when DOGE successfully closes above the mean of its down-channel. From there, a close above $0.320 would allow bulls to push higher.
Reasoning
Momentum was bearish-neutral on the Awesome Oscillator, a situation that was intact over the past two weeks. Similarly, the RSI was yet to fall completely into bearish territory, and it flattened between 40-45. However, since the candles traded on the lower end of the Bollinger Bands, some buying can be expected over the near-term.
Conclusion
Considering DOGE’s current market dynamics, low volumes and receding volatility could actually turn out to be favourable. This would mitigate chances of an extensive drawdown in case DOGE closes below its 200-SMA. On a positive note, since prices traded at an important support line, and at the lower end of the Bollinger Bands, chances of a breakdown were slim. However, DOGE needed to rise above 6th September’s swing high, of $0.320 to attract bullish traders back to the market.
