Dogecoin price spikes on Musk tweet, renews momentum for DOGE to test $1

Dogecoin price closed below the critical April high yesterday, putting the pursuit of $1.00 in doubt. The new Elon Musk tweet has reversed the descent and raises the potential of DOGE closing today with a bullish engulfing day.

Dogecoin price needs liquidity and FOMO

On May 11, Dogecoin price closed with two consecutive inside days, suggesting the decline from the May 7 high had been exhausted, and a renewal of the steep advance was around the corner. However, yesterday’s decline and close below the April high of $0.453 lowered the bullish outlook to neutral. 

The DOGE outlook brightened just a few minutes ago with a tweet from Elon Musk saying, “working with Doge devs to improve system transaction efficiency. Potentially promising.”

Suppose Dogecoin price closes today above the 50% retracement level of the rally from the April low at $0.443 and the April high of $0.453. In that case, the DOGE outlook will turn bullish and create the foundation for a new assault on the psychologically important $1.00. A bullish engulfing day, requiring a close above $0.530, would add to the strength of the bullish outlook.

To confirm a low, Dogecoin price needs to trade above the double-bottom trigger price at $0.597. A successful DOGE breakout from the bottoming pattern would target the 138.2% Fibonacci extension of the April decline at $0.756 and then the topside trend line from the January high through the April high currently at $0.798. Once the temporary resistance levels are liquidated, DOGE will be set to test $1.00 and the 161.8% extension of the April decline at $1.01.

DOGE/USD 12-hour chart

To be sure, Dogecoin price does experience wild swings thanks to social media headlines and overall FOMO. The news tonight is just another case, but if investors embrace the personality of DOGE and couple it with objective technical levels, they can successfully capitalize on one of the most important financial stories of 2021.