Dogecoin continues to attract a growing online community. Creators Billy Markus and Jackson Palmer created a free payment tool, instant, fun, and without banking fees. It has now received support from social media influencer Elon Musk, who tweeted about it earlier today, heavily hinting that now was a good time to buy Dogecoin. The DOGE/USD remains below a massive horizontal resistance zone. It retreated from an extensive 800%+ rally sparked by a Reddit group.
The Force Index, a next-generation technical indicator, confirmed the spike in volatility. It also shows the absence of current momentum, as marked by the green rectangle. It remains below its horizontal resistance level after moving below its ascending support level. The descending resistance level increased downside pressure, and bears wait for this technical indicator to slide below the 0 centerline to regain complete control over the DOGE/USD.
Following the retail trading frenzy in GameStop, pitting underfunded online retail traders against well-capitalized hedge funds, Dogecoin became the next target. The GameStop short squeeze ended, price action collapsed over 70% in a matter of days, and short interest remains strong. DOGE/USD will struggle with its horizontal resistance zone between 0.0599 and 0.0736, as identified by the red rectangle, even with support from Elon Musk. A brief breakdown may interrupt the retail frenzy.
One distinct difference between GameStop and Dogecoin is that there are no professional investors or traders involved. The ascending Fibonacci Retracement Fan Sequence may determine an ascending price range for traders to monitor. A retreat into its short-term support zone between 0.0350 and 0.0392, as marked by the red grey rectangle, will offer traders another buying opportunity in the DOGE/USD.
DOGE/USD Technical Trading Set-Up - Temporary Reversal Scenario
Short Entry @ 0.05200
Take Profit @ 0.03900
Stop Loss @ 0.05800
Downside Potential: 1,300 pips
Upside Risk: 600 pips
Risk/Reward Ratio: 2.17
A breakout in the Force Index above its descending resistance level can pressure the DOGE/USD into its horizontal resistance zone. With price action in unchartered territory, and many retail traders reeling from GameStop losses, the 0.1000 psychological resistance level may provide the next critical hurdle for Dogecoin.
DOGE/USD Technical Trading Set-Up - Breakout Scenario
Long Entry @ 0.06800
Take Profit @ 0.09800
Stop Loss @ 0.05800
Upside Potential: 3,000 pips
Downside Risk: 1,000 pips
Risk/Reward Ratio: 3.00
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