Dogecoin price dodged a bullet, but the narrative remains the same

Dogecoin (DOGE) price action was close to a meltdown on Thursday as DOGE price tanked on the back of stronger-than-expected inflation numbers out of the US. But, Dogecoin bulls came in and saved the day as traders focused on earlier prints of US retail prices coming down and that element not being reflected in the current inflation print. Traders are shrugging off the stronger number and buying into equities and cryptocurrencies.

DOGE price at risk of a dead-cat bounce

Dogecoin price action came close to a meltdown on Thursday as the US dollar strengthened following higher-than-expected inflation data, but then got saved at the last minute by traders that after  analysing the data more closely became convinced that the actual inflation was more benign than at first suggested. For example, several cities reported sharp drops in rental prices not reflected in the rental part of the inflation data. This made some traders fast-draw, going long, gambling that this might be the tipping point.

DOGE price action may give these bulls a negative surprise in coming days if a dead-cat bounce looms, with the 55-day Simple Moving Average (SMA) combining with the monthly pivot at $0.0620 as a double cap to the upside. Next, the Relative Strength Index (RSI) is nowhere near being oversold, so there is ample room for some more downside moves toward that monthly S1 at $0.0560..

DOGE/USD Daily chart

Yet it is also possible that bullish traders that caused the sharp turnaround on Thursday could be on to something, and it will be vital to see if more economic indicators come in reinforcing the case for  a tipping point in this inflation cycle. Should other indicators show that the Fed’s hikes already enacted are impacting on retail sales, lower spending, less demand etc. Expect then to see bulls piercing through $0.0620 and rallying up towards $0.0680 to the monthly R1 for starters.