By CCN.com: Originally created as a programmer’s practical joke, Dogecoin has defied the odds to cement its place near the top of the crypto market cap. Joke or not, however, this cryptocurrency is about to mount a serious challenge to Bitcoin, and prescient investors could yield a 185 percent windfall.
Through the years, one crypto trading formula that has stood the test of time is buying support while the market is oversold. The more oversold, the better.
That’s because oversold conditions provide selling relief. In other words, supply tends to dry up because the price is so low that no one’s interested in selling. Meanwhile, buyers return because the market is cheap.
You don’t have to be a rocket scientist to put two and two together. Rising demand plus low supply very often equates to a price surge
We’re seeing this dynamic happen in Dogecoin, which is currently priced at $0.00294 or 38 satoshis (0.00000038 BTC).
A quick look at the daily chart illustrates how Dogecoin bounced at the durable support of 35 satoshis (0.00000035 BTC) on May 13. This bounce was spurred by extreme oversold conditions. Unfortunately, the bounce was short-lived, as bottom-pickers quickly took profits.
Nevertheless, we expect the market to retest 35 satoshis (0.00000035 BTC) in the next few days and become oversold again. If Dogecoin hangs on for dear life, the race to the range high of 100 satoshis (0.00000100 BTC) would be on.
We’re confident that this cryptocurrency is likely to move bullishly – just as it did before – because it is painting a familiar pattern.
Technical analysis is the study of human behavior through historical price action. It captures market psychology by assuming that what happened in the past is likely to happen again in the future.
We’re seeing this assumption play out in Dogecoin as it prints a possible fractal. In trading and even geometry, a fractal is a close representation of a particular structure. The patterns often share many similarities.
In this cryptocurrency, we can see the right side of the chart imitating the price action on the left side of the chart. The left side of the chart generated four peaks before coming up with a monster rally. We can see the right side of the chart on its way to printing the fourth peak.
In addition, we can also see similarities in daily Relative Strength Index (RSI). The technical indicator had to get close to oversold territory three times before the meteoric rally on August 29, 2018. Again, we are seeing the resemblance this time around.
Crypto investors who agree with this assessment should buy as close to 35 satoshis (0.00000035 BTC) as possible with a tight stop. Should bulls defend the support one more time, Dogecoin will likely hit our target of 100 satoshis (0.00000100 BTC) and reward us with gains of 185 percent.
And yes, at least in the short-term, that means Dogecoin is a better investment than Bitcoin.
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This article was edited by Josiah Wilmoth for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor, or find a factual, spelling, or grammar error, please contact us and we will look at it as soon as possible.
Last modified: June 12, 2020 10:03 AM UTC