Dogecoin DOGE/USD surged almost 12% higher at one point during Thursday’s 24-hour trading session but was smacked down about 5% off the high-of-day, which caused the crypto to fall under the 200-day simple moving average (SMA).
In The News: Sentiment in Dogecoin is turning bullish following news Tesla CEO Elon Musk’s deal to purchase Twitter Inc TWTR will close Friday. Musk, who is a Dogecoin bull, has hinted at making Dogecoin the default currency for a potential Twitter wallet.
Shares of Twitter will be suspended from trading Friday, the deadline Musk has to finalize the takeover. Musk has said he plans to take the social media company private.
The 200-day SMA: The indicator is an important bellwether. Technical traders and investors consider a stock or crypto trading above the level on the daily chart to be in a bull cycle, whereas a stock or crypto trading under the 200-day SMA is considered to be in a bear cycle.
The 50-day SMA also plays an important role in technical analysis, especially when paired with the 200-day. When the 50-day SMA crosses below the 200-day SMA, a death cross occurs whereas when the 50-day SMA crosses above the 200-day, a bullish golden cross takes place.
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The Dogecoin Chart: Dogecoin was consolidating on smaller timeframes just under the 200-day simple moving average Thursday. A stock or crypto is rarely able to bust up through or fall down under the 200-day SMA on the first attempt because the area historically acts as strong support and resistance.
- Dogecoin is trading in an uptrend, with the most recent higher low formed on Oct. 21 at $0.057 and the most recent confirmed higher high printed at the $0.061 mark on Oct. 18. Eventually, Dogecoin will need to retrace to the downside to print its next higher low, which may provide a solid entry for bullish traders who aren’t already in a position.
- A retracement is likely to come soon because Dogecoin’s relative strength index (RSI) is measuring in at about 80%. When a stock or crypto’s RSI reaches or exceeds the 70% mark, it becomes overbought, which can be a sell signal for technical traders.
- If Dogecoin closes the trading day under the 200-day SMA, with a long upper wick, it suggests a retracement may come during Friday’s 24-hour session. If the stock closes above the 200-day SMA, Dogecoin may enter into a consolidation phase above the area, possibly with an inside bar pattern.
- Dogecoin has resistance above at $0.083 and $0.099 and support below at $0.075 and $0.067.
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