Where is Dogecoin headed next as cryptos volume, interest rates rise?

by Arthur · August 16, 2022

Dogecoin DOGE/USD surged over 17% higher during Tuesday’s 24-hour trading session before retreating slightly to trade up approx. 10% of Monday’s session.

The crypto hit the 9-cent level where it hit a group of sellers, likely due to Dogecoin’s relative strength index, which measured around 70%, putting the crypto into overbought territory.

RSI is an indicator technical traders use to measure bullish and bearish price momentum. RSI levels can range between zero and 100, with levels between 30 and 70 generally considered healthy.

When a stock’s RSI falls below the 30% level, it is considered oversold. When a stock enters oversold territory, it indicates that the security’s price no longer reflects the asset’s true value, which could signal a reversal to the upside is in the cards.

When a stock’s RSI rises above the 70% range, it is considered overbought. When a stock enters overbought territory, it signals that the security’s price has risen to its intrinsic value, which could signal a reversal to the downside is on the horizon.

The RSI is best used when combined with other signals and patterns on a stock chart because stocks can remain in oversold and overbought territory for an extended period of time before turning.

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The Dogecoin Chart: Dogecoin began trading in an uptrend on July 26, with the last high low formed on August 12 at $0.069 and the last confirmed higher high printed at $0.075 the previous day. On Tuesday, Dogecoin continued to climb higher, but the move was hampered by the crypto’s extended RSI.

Dogecoin also broke out of a bullish inside bar pattern that the crypto had developed during Sunday and Monday’s 24-hour trading sessions. As Dogecoin rebounded from Tuesday’s intraday high, the crypto held above Sunday’s intraday high, which is bullish.

The move higher on Tuesday came on higher-than-average volume, indicating an uptick in interest in the crypto. At the time of writing, Dogecoin volume on Coinbase measured a whopping 1.2 billion compared to the 10-day average of 401.27 million.

Dogecoin is trading above the eight-day and 21-day exponential moving averages, with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The eight-day EMA has led Dogecoin higher since August 5, and short-term traders may want to use an eight-day loss as a stop if the crypto falls below that level.

Traders who are not already in a position may choose to wait for Dogecoin to print its next higher low, which may occur at the eight-day EMA at the next retracement. Traders can look for crypto to print a bullish reversal candlestick, such as a doji or hammer candlestick, above the level.