Dogecoin (CRYPTO: DOGE) was trading about 1.2% lower on Wednesday afternoon in line with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which were also trading down about 1%.
The Shiba Inu-themed cryptocurrency has been volatile over recent weeks compared to the apex cryptos, which have seen much smaller price fluctuations as they consolidate on their downward trajectory.
On Wednesday, Dogecoin co-creator Billy Markus said on Twitter that he “read that 70% of the people who bought crypto last year were new to crypto,” which he said means those traders have not yet experienced a sector-wide bear market.
One could argue the crypto sector has now been in a bear market since at least Nov. 10, when Bitcoin and Ethereum began to fall from their respective all-time highs of $69,000 and $4,867.81. Over the period of time since that date Bitcoin has fallen almost 40%, while Ethereum has declined about 35% off its highs.
Dogecoin has taken an even longer hit over a longer period of time, plummeting about 78% from its May 8 all-time high of $0.739 to trade at just above the 16-cent level on Wednesday.
A bear market is generally defined as an investment declining more than 20% over a period of two months or longer.
Whether the crypto market will continue to slide in 2022 remains to be seen, but for shorter-term traders there are signs of life on Dogecoin’s chart that may indicate the temporary bottom is in.
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The Dogecoin Chart: Since reaching a high of $0.215 on Jan. 14, Dogecoin has retraced about 24%. On Wednesday, the crypto tested a support area at the 16-cent mark and bounced, which demonstrates there are buyers at that level.
If Dogecoin closes the 24-hour trading session within about 1% of its opening price, the crypto will print a doji candlestick on the daily chart, which indicates the temporary low may be in. If Dogecoin can trade higher on Thursday to confirm the candlestick was recognized, another higher low will be set, which would validate the uptrend is still intact.
To make a meaningful move higher, Dogecoin’s bullish volume will need to significantly increase, however, because by Wednesday afternoon the crypto’s volume was measuring in at just 272.15 million compared to the 10-day average of 511.19 million. The lower-than-average volume indicates a lack of investor interest.
Dogecoin is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA about to cross below the 21-day, both of which are bearish indicators. Dogecoin is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
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- Bulls want to see big bullish volume come in and push the crypto back up above the three moving averages and then up above a resistance zone at $0.176. Above the area there is further resistance at $0.196 and $0.211.
- Bears want to see big bearish volume come in and drop Dogecoin down below the 16-cent level and then for momentum to push the crypto below the most recent higher low that was printed on Jan. 12 at $15.1. Below the levels there is further support at 13 cents and the psychologically important 10-cent mark.
