Dogecoin fell beneath an area of demand, but just as it appeared poised for further losses, the price bounced from a level of support that was last tested in April of the previous year. At the time of writing, despite the nearly 35% gains that Dogecoin registered in the past week alone, the downtrend remained unbroken. At the time of writing, Bitcoin was above an area of demand at $40k. A move higher for Bitcoin could help Dogecoin.
Source: DOGE/USDT on TradingView
On the charts, the $0.16 area has been one of demand over the past six weeks. The price has repeatedly bounced from this area, although the bounces got weaker eventually. In early January, this demand area was overwhelmed, and DOGE appeared to be en route to a free fall.
In April last year, the $0.146 level had offered some resistance to DOGE’s explosive rally, and this was the same level that the price found a bullish order block at. This prompted an impulse move back toward $0.2 for DOGE in the past week.
However, the daily candles have not been able to close within the $0.19 area of supply. The long upper candlewicks were indicative of heavy selling in that area. Since the previous highs at $0.19 have not yet been broken, the market structure on the daily timeframe remained bearish.
Rationale
Source: DOGE/USDT on TradingView
In response to DOGE’s rally in the past few days, the +DI (green) on the DMI rocketed above the -DI (red), while the ADX (yellow) continued to stay above 20. This was suggestive of a bullish trend, although it was quickly weakening at press time.
The Awesome Oscillator also leaped above the zero line but has been registering red bars recently.
On the OBV, the high in December was not broken past, which meant that the buying volume in the past week was not able to undo the selling volume of the past month.
Conclusion
Although the indicators were bearish, DOGE was trading within an area that investors would look to see a bullish reaction at. The evidence suggested that the buyers have been exhausted once again, and the price would have to drop further before buyers were able to step in with strength. This level could be in the $0.13 area. Risk-averse investors must wait for Dogecoin to show some bullish strength before buying for long-term.
