Dogecoin (DOGE) appears poised to make a comeback, with a reliable technical indicator suggesting that it could be about to execute.
Warren Buffett's famous quote about being "greedy when others are afraid" seems to be alive in the cryptocurrency market. While the Crypto Fear and Greed index detected "extreme fear" in the markets, Dogecoin has surprised investors by entering a nearly 80% rally.
Dogecoin seems ready to make a comeback
Dogecoin seems ready to bounce back.
DOGE entered a consolidation period after hitting an all-time high of $ 0.74 on May 8. Since then, its price has been making a series of lower highs, while the $ 0.16 support level prevented it from a more pronounced correction.
A descending triangle appears to be emerging on the DOGE daily chart by drawing trend lines around the pivot highs and lows.
During the last few hours, a sudden increase in buying pressure managed to push DOGE beyond the hypotenuse of the triangle, suggesting a possible breakout. Increased buying pressure around current price levels could confirm that DOGE is poised for a 78% advance.
This target is determined by measuring the y axis of the triangle and adding that distance to the breakout point.
The Tom DeMark (TD) sequential indicator adds credibility to the bullish outlook, as it currently features buy signals on the daily and weekly charts. The bullish formations developed as nine red candles, which is indicative of a one to four candle rise within these time frames.
A daily or weekly trade of two green candles above a previous green candle can serve as confirmation of the TD buy signal, which could help propel Dogecoin's rally towards $ 0.34.
Although the odds appear to favor the bulls, investors should be aware that Dogecoin must stay above $ 0.16 for the bullish scenario to remain intact. Failure to do so could lead to a significant increase in the selling pressure behind DOGE.
A sell-off around this price point could see the eighth largest cryptocurrency by market cap drop roughly 40% to $ 0.095.