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- A rejection at $0.072 could draw the coin price to $0.065.
- Should Dogecoin retest $0.072, then the price action could drive toward $0.1
- DOGE’s formation of a falling wedge was instrumental to its recent 17% 30-day hike.
As October inches towards its last week, Dogecoin (DOGE) made sure talk about a monthly rally did not go without materializing. In the last 30 days, DOGE posted 17.41% gains, in a month that saw many cryptocurrencies follow Bitcoin (BTC) in the upward direction.
Dogecoin’s hike was not only a result of BTC’s rise or its correlation with the top-ranked asset by market cap. Instead, DOGE had formed a falling wedge dating back to 29 August through 18 October. This pattern was displayed on the DOGE/USD daily chart.
For those unfamiliar, a falling wedge is a pattern formed by drawing two descending lines. The top line represents a high while the other one represents a low. Whenever this pattern appears, a bullish reversal is formed.
A Correction Before a Breakout
According to the chart shown below, DOGE developed solid support at $0.0577 after the pattern formed. At the price, sellers were exhausted, and bulls took the opportunity to increase their buy orders.
DOGE broke out as the price pumped to $0.072. However, there was a 2.35% correction around the same point, with $0.071 as the rejection area. This drawdown may continue for another 3% to 5% if the Relative Strength Index (RSI) is anything to go by.
At press time, the RSI was 73.86, indicating that the coin was overbought. Thus, there is a chance that DOGE may decline to $0.065. However, this likely correction may not invalidate the bullish momentum. If demand continues after the price decreases, DOGE may rise as high as $0.09.
DOGE/USD Daily Chart (Source: TradingView)
Another bullish bias for Dogecoin is its correlation with Bitcoin. In the last 90 days, the BTC/DOGE correlation has hit 0.68, according to Macroaxis. This value is considered a relatively strong tie-up.
Historically, November is known to be one of the best-performing months for Bitcoin. So, if BTC continues its impressive performance in November, DOGE may also follow. If DOGE breaks out again, then a move towards $0.1 could be plausible.
Also, an indicator that can be instrumental in checking the possibility is the Exponential Moving Average (EMA). At the time of writing, the 20 EMA (blue) has formed a golden cross over the 50 EMA (yellow).
DOGE/USD Daily Chart (Source: TradingView)
This move is usually interpreted as a bullish sign. So, it is likely for DOGE to rise above $0.1 if there’s a successful retest of $0.072. At the same time, a fall below $0.070 may be the first stop.
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