In a notable turnaround, meme coin Dogecoin is now issuing a sell signal for future corrections after surging 30% in seven days.
Dogecoin price has attended an unprecedented rally in October, taking many investors who were on the sidelines by surprise. However, according to the opinion of crypto analyst Ali Martinez, the meme coin may actually see some price correction in the short term, before a continuation of the uptrend.
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Its insights are based on the signal provided by the TD Sequential indicator, a technical tool known for identifying points of market exhaustion.
Dogecoin may be overbought
In a recent post onMartinez 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 from the TD Sequential indicator. While this sustained increase in Dogecoin’s price has been impressive, it also indicates that the meme coin may be reaching a crucial juncture where a price pullback could occur.
To add caution, this sell signal coincides with a recently established overbought condition for Dogecoin. The Relative Strength Index (RSI) showed that recent buying momentum has pushed Dogecoin deep into overbought territory.
At the time of writing, the RSI 14 close is at an elevated level of 75.80, having recently peaked at 78.36, which is the highest level since March. This overbought condition suggests that the buying frenzy may be unsustainable, increasing the likelihood of a pullback very soon.
Is it time to sell DOGE?
Martinez’s remarks serve as a crucial reminder of Dogecoin’s volatility ahead of the new week. At the time of his analysis, Dogecoin was trading at $0.14575. However, at the time of writing, Dogecoin is down to $0.1424, translating to a 2.3% drop in just a few hours. Despite this, the meme coin still saw a 29% gain in the last seven days.
However, it is crucial to remain patient with Dogecoin’s outlook, especially as the RSI now points towards an overbought condition. On the other hand, Dogecoin is not the only cryptocurrency in an 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 extends through the rest of the weekend, it could see a near-term break below $0.14 and a return to $0.13 territory.
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The crowd’s attention and discussion around Dogecoin remains on its highest level since March. This suggests that any corrections could be temporary and that there is a high chance the uptrend will resume as the new week unfolds. According to a crypto analyst, Dogecoin is on the right track for a price hike with a return of more than 400%.
Featured image from Medium, chart from TradingView