Elon Musk Sends Dogecoin Running Higher Once Again: Can The Crypto Maintain Momentum?

Dogecoin DOGE/USD skyrocketed 44.85% at one point on Tuesday after Tesla, Inc TSLA CEO Elon Musk announced on Twitter the EV and technology company will begin accepting the Shiba Inu themed cryptocurrency as payment for merchandise.

The announcement was exactly what was needed to perk up Dogecoin, as a higher low printed Monday at the $0.151 level indicated the crypto may be ready to reverse trend.

Musk has been a strong proponent of Dogecoin and often communicates with the crypto’s co-creator, Billy Markus, over Twitter despite Markus no longer being involved with Dogecoin’s development. Last May, Musk announced he was working with Dogecoin’s current developers to “improve transaction efficiency” and on Nov. 10 sent a message of approval over Twitter after Dogecoin Core 1.14.5 was released, which lowered transaction fees.

Dogecoin has gained utility this year as more companies have made the choice to accept the crypto as payment. Mark Cuban’s Dallas Mavericks became one of the first entities to begin accepting Dogecoin for merchandise and ticket purchases in March and a slew of other companies, such as AMC Entertainment Holdings, Inc AMC, followed suit.

The broader acceptance of Dogecoin as a payment option has done nothing for the crypto’s price, which lost 53.71% of its value between Oct. 28 and Monday, before Musk sent the crypto on a run. That may be set to change, however, if Dogecoin can jump up above a key level.

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The Dogecoin Chart: Dogecoin was trading in a significant downtrend since Oct. 28 when the crypto spiked up to the 34-cent level and rejected it. On Dec 4, Dogecoin suffered a flash crash led by Bitcoin BTC/USD and consolidated the move lower over the following nine days.

After printing Monday’s higher low, Dogecoin shot up and printed a higher high at the $0.228 level but ran into heavy resistance and was trading about 16% down from the level by midafternoon. Dogecoin was unable to clear the level because of three heavy resistance zones at the price point: the 50-day simple moving average, a long-term ascending trendline and a support and resistance level near the 23-cent mark.

The move higher on Tuesday was made on massive volume, which indicates there is a high level of investor interest in the crypto and the bulls are in control. By midday, Dogecoin’s volume was coming in at over 1.24 billion, compared to the 10-day average of 391 million.

Dogecoin is trading above the eight-day exponential moving average (EMA) but below the 21-day EMA, which indicates indecision. If Dogecoin can regain the 21-day as support and trade above the level for a period of time, the eight-day EMA will cross above the 21-day, which would then be bullish.

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• Bulls want to see Dogecoin close the 24-hour session above the eight-day EMA and then for momentum on Wednesday to push the crypto up over the 19-cent area, which would allow Dogecoin to regain the 21-day EMA. Dogecoin has resistance above the level at 21 cents and the 23-cent mark.
• Bears want to see big bearish volume come in and drop Dogecoin down below Monday’s low, which would indicate the crypto’s price action was a bull trap and the downtrend may begin. Dogecoin has support below at 16 cents and $0.132.
  
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