Dogecoin seems to have formed a trading range which has the put the risk/reward ratio highly in favor of traders. As expected, the price has not violated the support level of 43 satoshis and has rebounded strongly, approving it as a near-term floor. In another shot at taking out the resistance of 50 satoshis, Dogecoin has failed miserably.
In my previous analysis, it was discussed that volatility may continue to play a decisive role, and the price is indeed oscillating wildly in the range. As of this moment, each Dogecoin is worth 47.9 satoshis.
Image: https://www.tradingview.com/x/4iCfPxEL/
After analyzing the 240-minute Dogecoin/Bitcoin price chart, it can be safely advised that Dogecoin may consolidate in the new range and hence, positions should be built as such.
Bollinger Bands – The chart above indicates that bears lack the strength to push the Dogecoin deeper below the lower range of the BB. The lower range is at 43.4 satoshis, almost coinciding with the floor.
Moving Average – Even though Dogecoin has managed to raise its head above the 20-4h simple moving average of 47.3 satoshis, the move does not inspire confidence. The numerous retesting of the support would only boost the bears’ morale.
Relative Strength Index – After spending considerable time near the oversold territory, the RSI indicator has turned slightly in favor of the bulls with a reading of 51.2474. This is one factor that short-sellers must consider before going aggressive.
Taking the above factors into consideration, it can be said that bulls need to make stronger and better efforts if Dogecoin is to hold its ground for a longer timeframe. Bearish momentum may have waned but it has not weakened enough. Long positions should be built near 43.8 satoshis for a target of 47 satoshis with a stop-loss placed just below the support level. Any stride towards the resistance level should be used to go short in Dogecoin.
