Dogecoin (CRYPTO: DOGE) turned into a bad, bad boy after becoming the pick of the litter and rising almost 950% between April 13 and May 8. Now down over 60% since its all-time high of 73 cents, Dogecoin looks to be teetering on a further collapse.
The Shiba Inu-inspired cryptocurrency has been following the pack, however, with leaders Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) trading down about 39% and 49%, respectively, on Friday.
The Dogecoin Chart: Dogecoin has been trading in a descending triangle since May 14 making lower highs on the daily chart. Instead of making lower lows, and entering a steep downtrend it has maintained a low of 29 cents and has not made a daily close below that level since reaching new all-time highs.
When a cryptocurrency or stock tests a trendline multiple times it weakens it and makes it more likely to bust through the level. Dogecoin has tested both the upper downward sloping trendline of the descending triangle and its 29-cent support level multiple times, which makes it difficult to predict which direction may come next.
On Friday afternoon, however, Dogecoin was trading slightly below the support level and bulls will want to see the crypto close the day back above it.
Dogecoin is trading below both the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day EMA, which is bearish. Dogecoin is trading above the 200-day simple moving average which indicates although short-term sentiment leans bearish overall sentiment in the coin remains bullish.
Bulls want to see Dogecoin break up through the top trendline of the triangle and for big bullish volume to push the crypto back up over the eight-day and 21-day EMAs. If it can regain both EMAs as support, it could jump over its next resistance level at 34 cents.
Bears want to see the descending trendline of the triangle continue to push Dogecoin down and for it to close under 29 cents. If the important support is lost Dogecoin could trade down toward the 24-cent level before possibly pawing its way back up.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights