- Dogecoin was able to get above a critical short-term level.
- A rally toward $0.35 might still be in the cards, but it looks less possible by the day.
- The limited upside is not telling a compelling story for buyers to get in.
Dogecoin (DOGE) has had its purification after the correction on August 24. Price dipped below $0.30 and fell into a distribution phase where sellers booked profits around $0.27. That level fell in line with the monthly R1 resistance level in August and is the current pivot level for this month.
The 78.6% Fibonacci level provides additional support at $0.28. So buyers got their fair share of solid entry levels and places to tuck away their stop losses.
Dogecoin buyers need to run prices further up
By now, Dogecoin should have already been at $0.35, but it is still hovering near $0.30. The reason for this is that it took buyers a lot of money to get above $0.30. A failed break on September 02, followed by another two failed breaks, is very costly for short-term buyers as they often get stopped out on their intraday trades.
As Dogecoin finally could open above $0.30, it will now be critical to see if it can stay above there. Buyers will need to step in further and put their stops a bit further below $0.30, so that they have some room to play the trade and do not get stopped out at the first test on $0.30 itself. Once they pull this off, to the upside, profit looks limited to 12% at $0.35. Dogecoin has the double top there from June 10 and August 16. To make the profit potential even more limited, at $0.36 is the monthly R1 resistance level.
This means that very close together, Dogecoin has two resistance levels limiting any further upside potential.
On the downside, there is a similar story for sellers with the 78.6% Fibonacci level at $0.28 and $0.27 at the monthly pivot. Should those levels give way, look for the 55-day Simple Moving Average (SMA) at $0.25 to provide support as in the past.