Doge Spikes 9% on Musk Adding ‘Ð’ to Twitter Profile — Here’s Three Reasons to be Wary of the Pump
Should you invest in Doge when Musk is involved? | Credit: Shutterstock
Key takeaways
- Elon Musk adds a Đ symbol to its Twitter bio, causing a 9% spike in the price of Doge
- Chart technicals suggest that the price isn’t ready for further increase, and there are early signs of struggle.
- The price is still in the mid-range of the accumulation zone, and a breakout above it is needed for a true bullish signal.
Elon Musk , known for favoring Dogecoin over all cryptos, has also been notorious for impacting its price rise by posting on Twitter. In fact, it has gone so far as to be labeled as calculated market manipulation.
On July 24, amid a sudden rebrand of Twitter to ‘X,’ he added a Đ symbol in his Twitter description bio, causing a price spike of 9.42% in Doge as investors quickly reacted.
However, unlike the market in which this alone could be enough to spark a cascading effect of buying, this time, in this market, investors should be wary.
Dogecoin Price Context
The price of Dogecoin has been stuck in a horizontal range since June 18, 2022. We saw a large upward spike of 164% in October of the same year, but the momentum was short-lived, causing the price to fall back within the range again in November 2022.
This range between $0.575 on its support, and $0.0929, on its resistance level, could be interpreted as an accumulation zone after 400 days of continuous downfall prior, starting on May 6, 2021, and currently lasting 401 days.
The price is now sitting just below the range median point and is making interaction on today’s spike. Technical indicators RSI and MACD on the daily chart also indicate that the price is mid-range, with MACD suggesting momentum slowing down.
It appears that we have seen a breakout from the descending trendline from the price spike in October 2022, but this trendline has neither been confirmed nor have we seen some significant volatility on a breakout.
Three Reasons to Be Wary
Considering what has been outlined in the price context, there are several reasons to be wary of his mini pump.
The first and maybe most important one is that the price has already come to the range median level and is now making an interaction that can end as a rejection. It can also break the level but would, in that case, still be uncertain to say how much upside potential it has since a large spike can end as a wick – ultimately leading the price back below $0.0747 (range median level).
Second, it has been very choppy since June 10, when this last upward move started that led the price to a breakout above the descending resistance. If the price started a bullish uptrend, the wave structure would have been impulsive and clearly formed higher highs and lows. Instead, the price action forms a triangle structure, indicating an indecisive upward movement.
Third, the upward spike we have seen today hasn’t lasted long, and the price was already retraced back to 0.786 Fibonacci retracement level, measured from today’s low of $0.07 to its highest peak of $0.078.
This can be an early sign that the rejection will occur at the range median level and that a descending move from these levels looks more likely at this point.
Conclusion
The price of Dogecoin has been forming an accumulation zone since June last year, and even though there were some positive signs in between, they were quickly invalidated. Today’s rise is no different, especially considering what’s causing it.
As the price interacts with the range media level, we are yet to see if the rejection occurs, but with the price retracement of around 80% measured at today’s rise, it looks highly likely that it will.
To propel a sustainable bullish sentiment, the price of Dogecoin needs to move above $0.093, which is the resistance level of the accumulation range, and not only that, but we would need to see a structure that supports an assumption of an impulsive move and establish some distinct higher lows.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
