Short sellers are making huge money by trading Dogecoin, which is repeatedly offering multiple opportunities in the market, and that too at low risk. I had earlier mentioned that the selling pressure in Dogecoin has not abated and that the low of 37.5 satoshis will be breached. As can be seen, the cryptocurrency has hit a new 2015-low of 36.3 satoshis amid intense selling pressure. Market participants can read my previous analysis here.
Dogecoin is currently valued at 42.8 satoshis.
Understanding the 240-minute Dogecoin/Bitcoin price chart above reinforces my view that the virtual currency should be sold on rallies.
Dogecoin Chart Structure – I had earlier mentioned that any rise up to 46-47 satoshis can be utilized to create short positions for a target of 40 satoshis. The chart above suggests that Dogecoin has offered several opportunities to traders to short near 46 satoshis and book profits as the price slumped to 40 satoshis. With the market still undecided about forming a base, it is only wise that buying should be halted.
Relative Strength Index – As the virtual currency slumped to new lows, the strength indicator also dived into the oversold territory. However, the RSI reading has quickly bounced off from that depression and is currently at 46.1536.
Volume – In this battle, the volume has clearly been above average. Consistently lower lows amid high trading volume do not suggest any positives for the bulls.
I reassert my view that traders should look to shorting Dogecoin near 46-47 satoshis by maintaining a stop-loss above 48 satoshis. However, the downside target has been further lowered to 38 satoshis, thereby making the trade highly attractive with a risk-reward ratio of 1:5. Instead of worrying about high volatility, the traders should use it to trade near extremes and make good profits at less risk.