Why this can be an ideal opportunity to buy Dogecoin
Dogecoin has had a rather disappointing week on the charts. A symmetrical triangle breakdown played out in favor of the bears, while short-sellers initiated further drawdowns below $0.280. In fact, DOGE was the worst weekly performer among the top 10 coins, down by over 11%.
On the plus side, DOGE’s descending wedge presented chances of an incoming price hike and a comeback above 15th August’s swing high of $0.35. At the time of writing, DOGE traded at $0.290, with a market cap of $38.12 Billion.
Dogecoin 12-hour Chart
Before jumping into a broadening wedge setup, it is important to understand that this pattern was yet to fully take shape. In fact, another low was projected at $0.280. In case of an early breakout, DOGE would first need to decisively close above the 20-SMA (red).
This would push DOGE towards next targets at $0.35 and 25th May’s swing high of $0.38. On the other hand, a low formed below $0.26 would present chances for short-sellers to trigger additional losses.
Reasoning
After DOGE reversed from its 12-hour 200-SMA, a few of its indicators noted key developments. For instance, the RSI avoided a dip into bearish territory and remained close to equilibrium, lending weight to a favorable recovery.
Meanwhile, MACD approached a bullish crossover as selling pressure eased, in the past few days. Similarly, the Directional Movement Index was also on the precipice of an important crossover above the -DI line. All these signs functioned as buy triggers in the market.
Conclusion
After logging in recent losses, Dogecoin set the tone for an upward price swing. Its price traded within the confines of a descending wedge setup – a pattern that usually triggers an upwards breakout.
Take-profits can be set between $0.35-0.38, in the event of such an outcome. However, before such a move, a low could be formed at $0.280, presenting an ideal buy opportunity for bullish traders.
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Saif Naqvi, @KhareemSudlow
