Dogecoin is back in the financial media headlines. The cryptocurrency popped 20% today on a tweet from a familiar Billionaire. Of course I am talking about the Dogefather himself, Elon Musk. Who was also just named TIME person of the year for 2021.
Musk caused a fury in the cryptocurrency when he tweeted this:
A big reaction right away, a 20% pop, yet many retail traders are still lamenting they are down on their positions. By the way, Musk isn’t the first Billionaire to create a use case for Dogecoin. Mark Cuban in August of 2021, tweeted about the Dallas Mavericks now accepting Dogecoin as payment for merchandise. The Mavericks are accepting many crypto’s for payment, but 95% of those sales were in Doge. On the day Cuban tweeted this, the price of Dogecoin had already made a 72% for that month, and price retraced for the rest of Summer. But the thing is Musk has a larger retail crowd following. And remember…he is the Dogefather.
The last time I looked at the chart of Dogecoin was back in late August of 2021. a reminder of the technicals then:
I was looking for this major support zone at $0.29-$0.30 to hold. The way that red candle was forming, was not a great sign. Breaking below support and below my moving averages. Unfortunately for Dogecoin bulls, the crypto did not hold support and drifted downwards for the months to come.
Above is the current chart of Dogecoin. Note our support and resistance zones. $0.30 still remains our major resistance. Price is actually near support at $0.17. In fact, we actually broke below this support zone a few days ago, and yesterday (Monday) confirmed a retest.
I must say, in all my years of following markets and trading, I see this kind of thing happen all the time. When an asset is near support or resistance, we tend to see press releases come out. Likely a way to keep the stock propped and above major support. In the case of Dogecoin, the meme crypto was ready to tumble after confirming yesterday’s retest. We were on the trajectory to prices below $0.10. Elon Musk changed all that. We know he owns some Doge. Don’t know how much, but he probably tried to bring back interest in the crypto after falling below this support.
What next? Well we have given up pretty much half of that 20% pop already. The key is how will we close? If the daily candle closes above $0.17, we have regained support. In technical terms, this would be a false breakdown. A bullish sign.
Things look more interesting on the 4 hour chart. A range has broken, and intraday, price is pulling back to retest the breakout. My horizontal black line comes in at $0.1830. This zone MUST hold for any sort of bullish momentum going forward.
Be aware that tomorrow is a big Federal Reserve day. If the Fed gets the US Dollar moving, it would impact crypto’s. What we have been seeing is crypto’s moving in tandem with stock markets. The correlation is in the high 90s. This means that both stocks and cryptocurrencies are risk on assets. Meaning both will sell off together if investors/traders run to safety after the Fed increases their taper as they are expected to do. This could put pressure on Dogecoin, and take us back below $0.17 very easily.