In a notable turn of events, meme coin Dogecoin is now flashing a sell signal for corrections ahead after a 30% rally in seven days.
The Dogecoin price has been on an unprecedented rally in October, taking many investors who have been on the sidelines by surprise. However, according to a take by crypto analyst Ali Martinez, the meme coin might actually undergo some price correction in the short term before a continuation of the uptrend.
His insights are grounded on the signal provided by the TD Sequential indicator, a technical tool known for identifying market exhaustion points.
Dogecoin Might Be Overbought
In a, Martinez highlighted the TD Sequential setup on the Dogecoin/TetherUS daily candlestick chart. This analysis reveals that Dogecoin is currently experiencing its ninth consecutive bullish close on the daily candlestick, aligning with the ninth count by the TD Sequential indicator. While this sustained surge in the Dogecoin price has been impressive, it also indicates that the meme coin may be reaching a pivotal moment where a price retracement could occur.
Adding to the caution, this sell signal coincides with a newly established overbought condition for Dogecoin. The Relative Strength Index (RSI) has shown that the recent buying momentum has pushed Dogecoin deep into the overbought territory.
At the time of writing, the RSI 14 close sits at an elevated 75.80, having recently peaked at 78.36, which is its highest level since March. This overbought condition suggests that the buying frenzy may be unsustainable, raising the likelihood of a pullback very soon.
Is It Time To Sell DOGE?
Martinez’s observations serves as a crucial reminder of Dogecoin’s volatility leading into the new week. At the time of his analysis, Dogecoin was trading at $0.14575. However, at the time of writing, Dogecoin has fallen to $0.1424, translating into a 2.3% decline in the few hours. Despite this, the meme coin is still on a 29% gain in the past seven days.
Nonetheless, it is crucial to remain patient with the Dogecoin outlook, especially as the RSI is now pointing to an overbought condition. On the other hand, Dogecoin isn’t the only cryptocurrency in overbought condition, as the entire market is now in a greed condition, according to the Fear and Greed Index.
If the 24-hour correction for DOGE were to extend for the rest of the weekend, it could cascade into a break below $0.14 in the short term and a return into $0.13 territory.
Crowd attention and discussion surrounding Dogecoin remain at their highest level since March. This suggests that any corrections may be temporary, and there is a high chance for the uptrend to resume as the new week unfolds. According to one crypto analyst, Dogecoin is on track for a price rally with a return of over 400%.
Featured image from Medium, chart from TradingView