Dogecoin (CRYPTO: DOGE) rolled over along with leader cryptocurrency’s Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) Sept. 7 just prior to El Salvador adopting Bitcoin as legal tender.
On September 2 the Shibu-Inu themed alt-coin broke up from a descending trendline that had been holding it down since its Aug. 16 high of 35 cents and soared up almost 10% higher. Technically speaking the break of the trend should have carried the crypto higher but Bitcoin’s sharp decline caused Dogecoin to plumet 30%.
On Sunday Dogecoin was behaving bullishly, trading higher in line with Bitcoin and Ethereum although on lower than average volume. When a large impulsive move up or down takes place in a stock or crypto it is usually followed by a multi-day period of consolidation to allow for new patterns to develop.
The Dogecoin Chart: Since closing the day on Sept. 7 at the 25-cent mark Dogecoin has spent the past 5 days consolidating the move. In its consolidation Dogecoin has settled under another descending trendline –trading lower into a tightening range while holding above a key support level at 23 cents.
History often repeats on stock and crypto charts and because Dogecoin broke up from a descending trendline the last time it created the pattern it is likely Dogecoin may make the same upwards move from the most recent pattern. If Dogecoin breaks above the descending trendline traders and investors will want to see big volume come in on the break for confirmation the pattern was recognized.
Dogecoin is trading below the eight-day and 21-day exponential moving averages (EMAs)with the eight-day EMA trending below the 21-day, both of which are bearish indicators. On Sunday Dogecoin regained the 200-day simple moving average (SMA), however, indicating overall sentiment is now bullish.
- Bulls want to see Dogecoin hold above 23 cents and for big bullish volume to come in and push the crypto up through the descending trendline. If the crypto can break bullishly from the pattern it has room to run up and regain support of the eight-day and 21-day EMAs which could then propel Dogecoin up over resistance at the 27-cent level.
- Bears want to see big bearish volume come in and break Dogecoin down below the important 23-cent area which would cause it to lose support of the 200-day SMA. Below the 23-cent mark Dogecoin has support at $0.20 and $0.16.