Analysis
Why Dogecoin is still shaky below this important price zone
Posted:
| Last updated: July 6th, 2023
The first week of October was quite bullish for Dogecoin. The popular ‘meme coin’ leader kickstarted a rally from $0.193 and climbed by 36%, helped by a risk-on broader market. However, the confluence of the daily 200-SMA (green), 50-SMA (yellow) and a resistance mark around $0.264 presented a major roadblock for bulls. Moreover, a 42% slash in trading volumes suggested that DOGE did not have the legs to push on forward, with sellers now eyeing a move of their own. At the time of writing, DOGE traded at $0.245, down by 1.6% over the last 24 hours.
Dogecoin Daily Chart
Source: DOGE/USD, TradingView
DOGE’s ascent was abruptly halted as investors booked their profits at an attractive price level of $0.264 – a region which coincided with the 50 and 200 Simple Moving Average lines. With a 42% nosedive in trading volumes across exchanges, chances of an upwards breakout were quite slim. Over the shorter-term, DOGE could look to defend incoming losses within a support area of $0.232 and the 20-SMA (red) but expect a retest of $0.193 in case sellers slice through this defense. If retail traders do not come to the rescue, a fresher low at $0.165 cannot be discounted as well.
In order to tilt the market in their favor, bulls would need an immediate close above $0.264. From there, swing highs of $0.320 and even $0.352 can be challenged.
Reasoning
The Relative Strength Index rose from the ashes and entered bullish territory for the first time in nearly a month. However, the index would need to find support at 50 in order to press higher. Considering the lack of retail interest in the DOGE market, it was doubtful whether bulls would be able to preserve this outlook. Moreover, the ADX declined from a peak of 37 and touched 27. A move below 25 would be a sign of weakening bullish strength.
Conclusion
Dogecoin could shift to its near-term support at $0.232 and 20-SMA (red) as buying pressure eases in the market. If sellers enforce a close below these defenses, DOGE would be extremely vulnerable to a sharper drawdown. The worst-case outcome could even see DOGE decline all the way to a support area of $0.152-$0.165.
