Dogecoin fell below an area of demand, but just as it looked poised for further losses, the price bounced off a support level last tested in April of last year. At the time of writing, despite the nearly 35% gain that Dogecoin has registered in the past week alone, the downtrend remains unbroken. At the time of writing, Bitcoin is above demand at $40k. A move higher in Bitcoin could help Dogecoin.
Source: DOGE/USDT on TradingView
On the chart, the $0.16 area has been the one in demand over the past six weeks. The price has consistently bounced up from this area, although eventually the gains became weaker. In early January, this demand area was overwhelmed and DOGE appeared to be on its way to free fall.
In April of last year, the $0.146 level offered some resistance to the explosive rally of DOGE and this is also the level where the price found a bullish block. This prompted a move back towards the $0.2 level for DOGE over the past week.
However, the daily candles failed to close in the $0.19 supply area. The long upper candlesticks are a sign of heavy selling in that area. As the previous high at $0.19 has yet to be broken, the market structure on the daily timeframe remains bearish.
Theoretical basis
Source: DOGE/USDT on TradingView
In response to the DOGE rally of the past few days, +DI (green) on DMI spiked above -DI (red), while ADX (yellow) continued to hold above the 20 level. This suggests a bullish bias, although it has rapidly waned at press time.
Awesome Oscillator also jumped above the 0 line but registered red bars recently.
On the OBV side, the December high has yet to be broken, which means that last week’s buying could not outpace last month’s selling.
Inference
While the indicators are all bearish, DOGE is trading in an area that investors will watch for a bullish reaction. Evidence suggests that buyers have dried up again and prices will have to fall further before buyers can boldly step in. This level might be in the $0.13 area. Risk-averse investors must wait for Dogecoin to show some bullish strength before long-term buying.