Dogecoin price action raises more questions than answers, while DOGE threatens a decline

• Dogecoin price responds to the oversold market with indecision and uncertainty, not characteristics of a significant low.
• DOGE fails at the 50-day simple moving average (SMA) with a sizeable reversal but confirms the double bottom.
• The 200-day SMA is the new line of defense as the digital token moves in an ascending parallel channel.

Dogecoin price rebound remains unvalidated as the cryptocurrency fails to register one close above the midline of an ascending parallel channel since the July 21 breakout. Without greater conviction, DOGE is not positioned for notably higher prices, and maybe the eight-day rebound is just a resting place before the correction resumes.

Dogecoin price behaves like a memecoin, not money

Over the last seven trading days, Dogecoin price has closed with four doji candlesticks, including today’s candlestick. The other three came very close. The lack of price traction embodied by the doji candlesticks is a clear reflection of indecision and uncertainty among the DOGE investor ranks. It may suggest the last eight days are simply a pause in the larger correction beginning in May.   

A second concerning development is the inability of Dogecoin price to manufacture one daily close above the midline of the new ascending parallel channel. Once again, emphasizing the underlying reluctance that is accompanying any intra-day strength for DOGE.

If investors did not target the breakout on July 21 as an entry price, it is challenging now to isolate a timely entry price as the rapidly descending 50-day SMA at $0.238 presses down on price. To adjust for the lack of conviction, DOGE investors should wait for a daily Dogecoin price close above the 50-day SMA before allocating capital.

DOGE/USD daily chart

Interestingly, Dogecoin price is granted three support levels that could contain weakness moving forward, and they closely align. The May 19 low of $0.195 has been instructive for DOGE recently, on the up and downside. A second layer of support is the lower line of the ascending parallel channel at $0.193. The final level is the strategically important 200-day SMA at $0.189 

A failure to hold the 200-day SMA on a daily closing basis introduces the potential to break below the July 20 low of $0.159 and the June 22 low of $0.152 

The presence of numerous doji candlestick patterns on the daily chart is not impressive, but it does not guarantee that the digital asset will flip to the downside. Nevertheless, it confirms a balance between supply and demand that is consistent with indecision and uncertainty.

In general, an uncertain investor base tends to rush for the exits at any sign of trouble. As a result, a Dogecoin price close below the 200-day SMA will invite a new wave of selling pressure, not the kind that is characteristic of real money.

Here, FXStreet's analysts evaluate where DOGE could be heading next as it looks ready to jump.