Dogecoin Pulls Back After Strong Rally

Dogecoin Video 06.05.21.

Dogecoin Tests Support At $0.60

Dogecoin lost momentum and made an attempt to settle below the support at $0.60 as traders took some profits after the recent rally.

Dogecoin quickly managed to get from $0.30 to $0.69 in less than two weeks as traders’ interest in the cryptocurrency increased and exchanges started to make it available for trading.

Cryptocurrencies remain very speculative in nature and often experience significant pullbacks so it’s not surprising to see that Dogecoin is moving lower after a strong rally.

Leading cryptocurrencies like Bitcoin and Ethereum have also lost momentum today so the downside move appears to be broad-based although XRP is moving higher.

Technical Analysis

Dogecoin faced resistance at $0.6650 and pulled back closer to the support at $0.60. RSI has pulled back a bit from recent highs, but it remains in the overbought territory.

In case Dogecoin manages to settle below the support at $0.60, it will head towards the next support level which has emerged at $0.5750. A successful test of the support at $0.5750 will open the way to the test of the support at $0.5350. If Dogecoin declines below this level, it will head towards the support at $0.45. There are no important levels between $0.45 and $0.5350 so this move may be fast.

On the upside, Dogecoin needs to settle above the resistance at $0.6650 to have a chance to develop upside momentum in the near term. The next resistance level is located near the recent highs at $0.70. If Dogecoin manages to settle above this level, it will gain additional upside momentum and head to new highs.

At this point, today’s trading action looks like a normal pullback after the major upside move. However, cryptocurrencies are very dependent on momentum so Dogecoin needs to quickly get closer to recent highs to continue its upside move. If Dogecoin fails to get more upside momentum in the next few days, the risks of a significant pullback will increase.

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