In my yesterday’s analysis, I mentioned that Dogecoin was going nowhere and had restricted itself to an extremely tight range. Although nothing significant has changed in price terms as the value of each Dogecoin is still 50.9 satoshis, a narrowing price range indicates that a breakout may be seen in the next 48-72 hours.
I have discussed below the various inferences drawn after implementing a couple of technical indicators on the 240-minute Dogecoin/BTC price chart.
- Chart Structure – As mentioned above, the price action has taken the form of lower highs, higher lows thereby forming a contracting channel. As is evident from the chart, this range has been formed in the past 72 hours. A breakout in either direction in the coming sessions should lead to a swift movement in the price, threatening the associated level of the Bollinger Bands. The bands are currently at 50.2 satoshis and 52.6 satoshis.
- Relative Strength Index – The RSI value is little changed from yesterday’s level. It continues to hover around 50, with unexciting deviations. Currently at 48.4196, the indicator does not give sufficient clues to predict the price direction for future sessions.
I would recommend not trading the range as the risks outweigh the rewards in the current situation. A wait-and-watch policy can be adopted and fresh trades should be initiated only after a breakout has happened. If the price closes above 51.8 satoshis, long trades should be made for a target of 52.7 by maintaining a stop-loss just below 51.5 satoshis. However, in case a bearish situation unfolds and price closes below 50.8 satoshis, sell trades should be initiated for a target of 50 satoshis while a stop-loss is placed above 51 satoshis. Adopting this strategy greatly reduces the risk exposure while keeping chances of significant rewards intact.