Dogecoin staged a compelling price rebound from the perfect touch of the 200-day simple moving average, driving Dogecoin to the previous price congestion level that is reinforced by the 23.6% Fibonacci retracement level of the May-June decline. The meme token may experience some residual selling pressure, but as long as the May 19 low holds, Dogecoin is positioned for higher prices.
Dogecoin price declined 80% from the May 8 high of $0.760 level to the June 22 low of $0.152, placing it among the worst-performing crypto during that period, thereby tainting the social media attractiveness of the meme token.
The 36% decline on June 21 shook DOGE price from the tight range that defined Dogecoin for several days, and the magnitude of the drop severed any possible support level at the May 19 low of $0.195. However, the bearish outlook got a reprieve on June 22 when the Dogecoin price briefly tagged the 200-day SMA at a price of $0.150 and rebounded strongly, indicating that experienced, large institutional investors were entering the market.
Moving averages are used to define support level and resistance level, as well as to define the trend. Still, they also are used to gauge the commitment of astute investors targeting high probability trading volume opportunities. It is evident by the reaction of Dogecoin price to the 200-day SMA that big institutional investors, not retail investors, were accumulating DOGE.
Adding credibility to the Dogecoin narrative that defines June 22 as the low is the definitive oversold condition expressed by the daily Relative Strength Index on June 21. It marks the first oversold condition for DOGE price since March 12, the day before the final low that launched a 400% rally.
Moreover, if DOGE regains price traction into tomorrow, it may close the week with a bullish hammer candlestick pattern level, further confirming a meaningful Dogecoin low. It is important to note that single candlestick patterns carry more importance on larger timeframes.
The near-term concern for extending the DOGE rally is the strong resistance cultivated by the confluence of the declining trend line level from the May high at $0.282 and the 23.6% retracement level at a price of $0.296. The convergence of the two levels halted the DOGE price rebound and set DOGE back 10% yesterday.
A close above the two resistance levels puts DOGE price on course to test the 50-day SMA at $0.369 and then the 38.2% retracement level at $0.384.
If the Dogecoin price closes below the May 19 low of $0.195, it will raise the odds of another test of the 200-day SMA, or potentially a new correction low. Nevertheless, DOGE price market operators should use the retreat to accumulate a position.
DOGE price, at times, has taken a different path from the majority of altcoins due to social media interference and elevated levels of FOMO. It will always be a factor in every Dogecoin investment decision. However, the digital asset appears to have established a foundation for higher prices moving forward.
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