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Looking at Dogecoin’s daily chart, the price has bounced strongly off the $0.1400 level for a third time and it is now retesting the 21-day exponential moving average (EMA).
On almost every occasion that the price has tagged this key resistance, it has been pulled down by market forces as bearish sentiment has dominated the scene since December.
Can This Time Be Different?
The volume profile for DOGE shows that this is a high-value area for the token as trading volumes have been strong as the price enters the $0.18 and $0.15 range.
This has been a contested zone for bulls and bears in the past and this increases its relevance from a technical standpoint.
Beware of Another Bull Trap
Momentum indicators favor a bearish outlook as the Relative Strength Index (RSI) currently hovers above its signal line (14-day SMA) while the MACD’s histogram has been in positive territory for a couple of weeks now.
The risk lies in that DOGE has already broken above the 21D EMA multiple times but the rally has fallen short of expectations and has turned out to be a bull trap in all of these past instances.
Hence, as the prevailing sentiment is bearish and the market’s outlook remains highly uncertain, traders should be careful not to get their hopes up and put too much money into a trend reversal until it is fully confirmed.
Meanwhile, if the price pushes through the $0.17 level, this could raise the odds of a retest of the $0.20 area, meaning a 17.6% short-term upside potential for DOGE.
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