Dogecoin price seems to have taken a breather from the new year rally that propelled it as high as $0.0940. At the time of writing the leading meme coin is down 4.8% while trading at $0.0840. This trend pullback is not unique to DOGE, with Ethereum down 5%, Cardano and Solana both down 6.2%, while the Shiba Inu is trading down 6.6% on the day.
Total crypto market cap fell nearly 3.5% to just above $1 trillion. This is the first major pullback since the bulls started aggressively pushing higher prices in early January. The volatility in Dogecoin and Shiba Inu brought back the meme coin hype, which contributed to the crypto market reclaiming the $1 trillion capitalization mark a few weeks ago.
A note on market conditions sent to CoinDesk by the Bitfinex exchange notes that the rally looks promising “on paper,” but the asset still lacks support from traders.
“While the rally looks promising on paper, the reality is that there are still limited traders in the markets,” Bitfinex analysts wrote in a Jan. 19 note sent to CoinDesk.
Bitfinex explained that:
“With the recent leg-up driven purely by sentiment, low funding rates and low liquidations.”
Dogecoin Price Rally Takes a Breath, This Is Why It Looks Ready to Continue
Dogecoin price halted its three-week rally, but price analysis suggests that the bullish trend will resume soon. There is a green candle sitting on support at $0.0802 on the daily time chart at the confluence of the 50-day exponential moving average (EMA) (in red) and the 100-day EMA (in blue).
However, the bulls should keep their feet down and deal with an immediate resistance at $0.0866, as reinforced by the 200-day EMA (in purple) and the lower boundary of the declining trend channel. A successful break and hold above this seller congestion zone will leave the bulls to worry only about the upper boundary of the channel as they press for gains above $0.10.
Although the Moving Average Convergence Divergence (MACD) indicator maintains a buy signal since the beginning of the year, it is looking increasingly likely that it will be a sell. Hence, traders should pay close attention to the momentum of the MACD (blue colored line) in the upcoming sessions as losses could intensify if it moves below the average line. Besides, a close above the mean line and possibly from the downside zone is likely to force dogecoin price lower to $0.0722 and $0.0602 respectively.
The Dogecoin price outlook in the lower time frames is relatively weak – worsened by negative volume flows seen with the Money Flow Index (MFI) indicator. Like the Relative Strength Index (RSI), the MFI DOGE measures momentum by taking into account the inflow and outflow of funds into the markets.
A sharp fall in the MFI from the overbought to the oversold area shows that the sellers have the upper hand. Investors started betting on short positions in Dogecoin price soon after it slipped below $0.09, with the bottom of the 50-day EMA at $0.0855 joining the selling party.
If the downtrend persists, more short positions will be taken below the 200-day EMA (in purple) and below the 100-day EMA for potential profit booking at $0.08.
Is it now possible to buy the decline in the price of Dogecoin?
Despite this mid-week retracement, Dogecoin price may soon resume its upward move. Such a bullish scenario could be attributed to a buy signal from the leading indicator super trend indicator. While overlaying the chart like a moving average, it considers data from the Technical Index Average True Range (ATR), thus measuring market volatility.
As long as the Super Trend Indicator is trailing the price of Dogecoin, the odds favor a bullish outcome. Furthermore, we cannot rule out the possibility of a possible recovery of DOGE price momentum from the 100-day EMA (in blue) on the four-hour time frame chart.
Therefore, traders want to enter new buy order Might consider waiting until the Dogecoin price rises above the 50-day EMA on the same daily chart. From here, the buyers would expect a breakout above $0.09 and $0.10 respectively.
This can be attributed to the strong support provided by the Dogecoin price, with many investors taking profits after the breakout in January. IntoTheBlock’s IOMAP model establishes an extreme buyer rush between $0.0738 and $0.076, where 51k addresses bought approximately 40 billion DOGE. Investors in this range will be ready to throw their weight behind Dogecoin price to recapture a resumption of the rally.
The model highlights the absence of strong strong resistance that could suppress the bullish outcome. Therefore, a minor push is required in Dogecoin price to ignite an aggressive rally above $0.1.
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