Dogecoin price analysis: Will $0.06 support hold?

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Dogecoin could consolidate in the next few days

A Dogecoin (DOGE) token and dollar bills                                 
Dogecoin witnessed buying at lower levels after its price fell in line with a recent price plunge across the crypto market – Photo: Alamy
                                

Contents

The sharp fall in cryptocurrency prices on 26 August also affected Dogecoin (DOGE), which plunged about 8% for the day. However, a positive sign is that lower levels witnessed buying and the bulls are attempting to start a recovery from the strong support of $0.06 as of 31 August 2022.

Risky assets have been on the edge after the US Federal Reserve chair Jerome Powell maintained a hawkish stance in his speech at the annual Jackson Hole Economic Symposium on 26 August.

Another hawkish voice was that of New York Federal Reserve president John Williams, who warned that interest rates were likely to remain higher until inflation cools off. In an interview with the Wall Street Journal, Williams said that restrictive policy was likely to continue for some time. “This is not something we’re going to do for a very short period and then change course,” he added.

The macro headwinds may have kept investors away from meme coins, which are generally in focus when traders are willing to take on risk.

In other news, a Twitter user who goes by the name RepeatAfterVee highlighted that Dogecoin co-founder Billy Markus was offered $14m to promote the Dogechain project, but he rejected the offer.

Could buyers start a recovery? Could Dogecoin go up again? Read the DOGE price analysis to find out.

Dogecoin price technical analysis: Weekly chart

Dogecoin weekly price analysis chart for 31 August 2022
Dogecoin weekly price analysis chart for 31 August 2022 – Credit: Currency.com

DOGE’s price extended its downward move last week and fell 10.77% to finish at $0.06. The downsloping moving averages and the relative strength index (RSI) in negative territory indicate that bears are in command.

If bears sink the price below the strong support at $0.06, the DOGE/USD pair could retest the June lows just below $0.05. This is an important level for the bulls to defend because if this support cracks, the pair could start the next leg of the downtrend. The pair could then decline to $0.04.

On the contrary, if the price rises from the current level, the bulls will make one more attempt to push the pair above the 20-week exponential moving average (EMA). If they succeed, the pair could rally to the downtrend line and then to the 50-week simple moving average (SMA).

The buyers will have to propel the price above this resistance to signal the start of a new uptrend.

Dogecoin price technical analysis: Daily chart

Dogecoin daily price analysis chart for 31 August 2022
Dogecoin daily price analysis chart for 31 August 2022 – Credit: Currency.com

Buyers tried to push DOGE’s price above the 20-day EMA on 25 August but the bears held their ground. This intensified selling and the pair dropped to the strong support of $0.06 on 30 August.

The downsloping 20-day EMA and the RSI near 41 suggest that the bears have a slight edge. If the price slips and sustains below $0.06, the selling momentum could pick up. The pair could then decline to $0.05.

To invalidate this bearish view, the bulls will have to push and sustain the price above the moving averages. That could open the doors for a possible rally to $0.08 and then to $0.09. This level may again act as a strong hurdle but if the bulls overcome it, the pair could rise to the downtrend line.

Dogecoin: Buy or sell this week?

Dogecoin is trading near the critical support at $0.06. If this level gives way, Dogecoin price analysis suggests that the pair could decline to $0.05. On the other hand, if bulls drive the price above the moving averages, the pair could rally to $0.08.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.

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