Dogecoin has witnessed a powerful display of strength from both sides in the past 24 hours. The cryptocurrency soared above the resistance level on the back of strong volume and went on to hit a high of 51.2 satoshis, before the bears made an emphatic comeback to bring the high-flying cryptocurrency back to the ground – each Dogecoin is currently worth 47.2 satoshis. The extreme volatility should have served as a wake-up call for the trading community.
I had been reiterating that a major move is expected by the end of the week and with the recent volatile action, chances of a significant deviation from the present level have greatly increased.
Analysis of the 240-minute Dogecoin/Bitcoin price chart reveals that bears still have the situation under control.
Chart Structure – The cryptocurrency leapt above the 50 satoshis resistance mark after an extended consolidation phase. But, the pompous bulls could not maintain the momentum which soon fizzled out and the cryptocurrency came crashing down with a thud. Erasing all the gains is a major negative for the Dogecoin.
Bollinger Bands – The intraday surge saw the digital currency temporarily breach the upper range of the Bollinger Bands. The altcoin has now reverted to its previous trading zone – between the lower range of the BB and the 20-4h simple moving average (see the chart above).
Relative Strength Index – The RSI reading has dropped from roughly 48 to 45.5992 indicating that the bulls have lost confidence after making a brave attempt.
Short-term traders and speculators are advised to stay short in Dogecoin with stop-loss maintained above 50 satoshis. Volatility has re-entered the market and can lead to wide price swings, therefore, participants must remain alert. Positions should be built keeping the personal risk appetite in mind. Traders should go aggressive only after a clear direction has been chosen by the market.