Dogecoin Breaks Bearish Structures!

Following yesterday's daily candle close, a buy scenario has been confirmed through technical analysis. Here's an updated outlook on the potential price movements of Dogecoin (DOGE), along with a concrete strategy to take advantage of the upcoming opportunities.

4-hour time frame analysis

DOGEUSD - 4 Hour Time Frame

Firstly, it's essential to note that the price bounced off a key support zone, which had been tested previously, before closing above resistance on the daily timeframe, turning it into a new support.

As a result, sell-side liquidity accumulated below the low of the initial decline, primarily from retail traders who bought in early and placed stop-loss orders under this low.

With the latest drop, this liquidity was absorbed, providing a counterparty for commercial market participants looking to buy Dogecoin.

We advise against entering buying positions during these downturns since retail traders often lack the necessary information. Instead, it’s better to wait for a confirming technical parameter to achieve a reasonable risk-to-reward ratio.

The confirmatory buy signal, as mentioned earlier, was established when the price closed above resistance on the daily timeframe, breaking through bearish structures in the process.

When to buy Dogecoin?

Given the strong momentum during the breakout, it's now possible to enter the market, but with caution. Initially, you should enter with half your intended volume, and then add the remaining volume during a corrective decline.

A stop-loss order should be placed below the low of the newly formed bullish structure, while take-profit targets should be set at the buy-side liquidity level within the weekly timeframe resistance.

However, if the price closes below the newly formed support on the daily timeframe (marked in orange on the chart), it would be wise to sell part of the position, as this would reduce the probability of the trade's success.