How Dogecoin Looks Following Elon Musk-Fueled Mini-Rally

Dogecoin DOGE/USD spiked up more than 15% higher at exactly 11:27 a.m. on Friday when Tesla, Inc TSLA CEO Elon Musk took to Twitter Inc TWTR to say that the SpaceX merchandise will soon be available for purchase in Dogecoin.

The surge lasted for two minutes and was followed by a slow retracement back toward the crypto's 24-hour opening price by midafternoon.

On Jan. 13, Tesla began accepting Dogecoin in exchange for some of its merchandise. At that time the Tesla Cyberwhistle was listed for sale for 300 DOGE but due to the heavy depreciation of the crypto’s value, Tesla last had the whistle priced at 645 DOGE and the item is now sold out.

Dogecoin has plunged about 53% since then, to trade near the 8-cent mark, in a fairly consistent downtrend. The Musk-induced spike higher on Friday negated that trend, although the bulls have more to prove if an uptrend is about to begin.

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The Dogecoin Chart: Dogecoin negated the downtrend by rising up above the most recent lower high, which was printed on May 23 at $0.0884. When the crypto spiked upwards, Dogecoin attempted to regain support at the 21-day exponential moving average (EMA) but rejected just below the level, which caused Dogecoin to fall back below the eight-day EMA.

• From a technical standpoint, Dogecoin looked set to run higher, at least temporarily, because on Thursday and Friday the crypto bounced up off the $0.075 level, creating a bullish double bottom pattern. If the pattern is still in play, bullish traders will want to see the crypto make another run higher later on Friday or on Thursday and ideally close one of the two 24-hour trading sessions above the eight-day EMA.
• Bearish traders will be hoping the brief spike in Dogecoin’s price was a bull trap and that the crypto will fall lower over the coming days to confirm the downtrend is still intact.
• Dogecoin’s relative strength index (RSI) has been hovering just above the 30% level since May 13, which puts the crypto near oversold territory. This makes a potential run higher likely because the last time Dogecoin’s RSI stayed near 30% for over 14 days was between June 23 and July 20, 2021, which was followed by 107% surge between July 21 and Aug. 15, 2021.
• Dogecoin has resistance above near the 10-cent and 12-cent levels and support below at $0.065 and 5 cents.

See Also: If You Invested $1,000 In Dogecoin At Its COVID-19 Pandemic Low, Here's How Much You'd Have Now

Photo: surassawadee via Shutterstock