Dogecoin (CRYPTO: DOGE) together with the leading cryptocurrency Bitcoin (CRYPTO: BTC) and ether (CRYPTO: ETH) September 7, just before El Salvador introduced Bitcoin as legal tender.
On September 2, the Shibu-Inu-themed alt-coin broke off a descending trendline that had held it at 35 cents since its August 16 high and rose nearly 10% higher. Tech-wise, breaking the trend should have pushed crypto higher, but Bitcoin’s sharp decline caused Dogecoin to drop 30%.
On Sunday, Dogecoin was bullish, trading higher in line with Bitcoin and Ethereum, albeit at below average volume. When there is a large impulsive up or down movement in a stock or cryptocurrency, it is usually followed by a period of consolidation lasting several days to allow new patterns to develop.
See Also: Dogecoin’s Rise To $ 1 By Year End: A Possibility Or A Pipe Dream?
The Dogecoin Chart: Since the close of the day on September 7th at the 25 cent mark, Dogecoin has spent the past 5 days consolidating the move. As it has been consolidating, Dogecoin has leveled off below another declining trendline – trading deeper into a tightening area while holding above an important support level at 23 cents.
History repeats itself many times on stock and crypto charts, and since Dogecoin was separated by a descending trendline when the pattern was last created, it is likely that Dogecoin will make the same upward move from the most recent pattern. When Dogecoin breaks above the descending trendline, traders and investors will want to see large volume to confirm that the pattern has been recognized.
Dogecoin trades below the 8- and 21-day exponential moving averages (EMAs), with the 8-day EMA trading below the 21-day trend, both bearish indicators. However, on Sunday, Dogecoin regained the 200-day Simple Moving Average (SMA), suggesting that overall sentiment is now bullish.
- Bulls want Dogecoin to hold above 23 cents and for a large bullish volume to come in and push the crypto up through the descending trendline. If the cryptocurrency can break out of the pattern in a bullish way, it has scope to move up and regain support from the 8- and 21-day EMAs, which could then propel Dogecoin to the 27-cent level via the resistance.
- Bears want to see large bearish volume and drop Dogecoin below the important 23 cent area, which would cause it to lose support from the 200-day SMA. Below the 23 cent mark, Dogecoin has support at $ 0.20 and $ 0.16.