The prevailing scenario in Dogecoin must be giving sellers enough reasons to smile while the bulls must be bleeding in copious amounts in this falling knife case. I have been maintaining that the current price trend does not favor the buyers and advised against buying into this market. Those who have followed my analysis must have avoided huge losses as Dogecoin has plummeted to a fresh 7-month low of 35.7 satoshis as the market gets into a panic mode.
Dogecoin is currently languishing near the lows at 35.7 satoshis.
An analysis of the 240-minute Dogecoin/Bitcoin price chart reinforces my view that the cryptocurrency should only be viewed as a shorting candidate.
Dogecoin Chart Structure – The chart above reveals that the cryptocurrency has hit a ceiling around 42-43 satoshis while there seems to be no floor.
Bollinger Bands – The market has struggled to close above the 20-4h simple moving average for some time now; the latest SMA is 41.5 satoshis. Under severe pressure, Dogecoin has also pierced the lower range of the BB (see the chart above) and is sustaining below it.
Volume – Traders have remained fairly active in this slump; the volume activity during the weekend decline was considerably strong.
Relative Strength Index – The latest RSI reading of 24.7899 suggests that Dogecoin has entered the short-term oversold territory.
Even as the pessimism refuses to fade away and the bearish pressure intensifies with time, it might not be appropriate to create fresh short positions at current market valuations. Technical indicators above also reveal that Dogecoin is oversold from a near-term perspective and hence, market participants must wait for a rally up to 42 satoshis to place bearish orders for a target of 36 satoshis. High volatility will continue to plague the market. Do not even attempt to catch this falling knife!