Dogecoin (CRYPTO: DOGE) retested a key support level at the $0.196 level again on Tuesday and bounced slightly north. The cryptocurrency market has struggled to erase loses caused by a flash crash on Sept. 7 when El Salvador adopted Bitcoin (CRYPTO: BTC) as legal tender.
On Monday evening Gary Gensler, chairman of the Securities and Exchange Commission, came just short of saying he wants cryptocurrency platforms to fall under SEC regulations, but did say he believes the platforms would be more likely to succeed if they complied with regulation under existing tax compliance, money laundering and insider trading laws.
The Dogecoin Chart: Dogecoin broke down from a pennant pattern when it reached the apex on Sept. 19. On Sept. 20, the crypto slid a further 14% south but bounced near the key support level. Dogecoin has tested the level four times and bounced.
On Tuesday, Dogecoin looked to be printing a small doji candlestick with a daily trading range of just over half a cent. A doji at the top or bottom of a trend can indicate a reversal is in the cards, and if the candle pattern is recognized, the crypto could trade higher on Wednesday.
Dogecoin is also trading in a descending triangle pattern that has been holding the crypto down since Sept. 17. Dogecoin will meet the apex of the triangle on Wednesday and may break up or down from it before the date. When Dogecoin breaks from the pattern, traders will want to watch for large volume to come in to confirm whether the formation was recognized.
Dogecoin is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators.
Dogecoin is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
- Bulls want to see big bullish volume come in and break Dogecoin up from the descending triangle pattern and for the crypto to regain support at the eight-day EMA. Dogecoin has resistance above at the 23-cent and 27-cent marks.
- Bears want to see Dogecoin drop below the key 19-cent level on big bearish volume. If Dogecoin loses the level as support, it could fall toward 16 cents.