Dogecoin (CRYPTO: DOGE) was trading mostly flat on Friday afternoon after staging a 17% recovery from its low of $0.106 on Thursday. The mini-crash was a bearish reaction to news Russia had begun a full-scale invasion of Ukraine that came late Wednesday evening.
On Tuesday, cryptocurrency trader Michaël van de Poppe said he believes the panic that initially hit the crypto markets is over for the time being and predicted altcoins could go on a 20% to 45% run. If Dogecoin were to run that amount it would trade up between about 15 cents and the 18-cent mark.
Dogecoin could get a boost to that level if Twitter decided to add a Dogecoin to its tip jar options. On Thursday, co-founder Billy Markus posted a link to a change.org petition titled “Add Dogecoin Wallet Support to Tipping Feature on Twitter” in hopes enough people would sign to pressure the social media app to add the feature.
Aside from receiving a lift higher based on a new event, Dogecoin has developed into a pattern on the daily chart that could quickly turn bullish if the formation becomes recognized.
The Dogecoin Chart: Dogecoin has been trading in a falling channel since Feb. 8, making a consistent series of lower highs and lower lows as it slides lower in a downtrend. The falling channel pattern is considered to be bearish until a stock or crypto finds a bottom within the channel and big bullish volume comes in and breaks the stock or crypto up from the upper descending trendline. A break of a falling channel is considered a strong reversal signal.
On Friday, Dogecoin was printing an inside bar pattern, with the day’s trading range completely inside Thursday’s range. The inside bar is considered neutral in this case and both bulls and bears can watch for a break from the pattern later on Thursday to gauge the future direction.
Dogecoin’s relative strength index (RSI) is measuring in at about 34%, which indicates a bounce may be on the horizon. When a stock or crypto’s RSI nears or reaches the 30% level it becomes oversold, which can be a buy signal for technical traders. When Dogecoin’s RSI fell to the 32% level on Jan. 22, the crypto shot up about 22% over the four days that followed.
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. The crypto is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
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- Bulls want to see big bullish volume come in and break Dogecoin up from the falling channel pattern, which will cause the crypto to regain support at the EMAs. Dogecoin has resistance above at $$0.135 and $0.146.
- Bears want to see big bearish volume break Dogecoin down from the inside bar pattern, which will cause the crypto to lose support at the 12-cent level. Below the area, there is further support at 10 cents.