Dogecoin Flashes Sell Signal After 30% Rally, But Correction May Be Temporary

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.

Meme coin Dogecoin (CRYPTO: DOGE) is now flashing a sell signal for corrections ahead following a 30% rally in seven days.

After an impressive rally in October that caught the attention of many investors, Dogecoin might actually be up for some price corrections in the short term before a continuation of the uptrend, according to crypto analyst Ali Martinez.

His insights are based on the signal provided by the TD Sequential indicator, a technical tool used to identify points of market exhaustion.

Dogecoin Might Be Overbought

In a recent post on Medium, Martinez highlighted the TD Sequential setup on the DOGE/USDT 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.

This sustained surge in the Dogecoin price has been impressive. However, it also indicates that the meme coin might 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 pushed Dogecoin deep into the overbought territory.

At the time of Martinez’s analysis, the RSI 14 close sat 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, increasing the likelihood of a pullback very soon.

Is It Time To Sell DOGE?

Martinez's observations serve as a crucial reminder of Dogecoin's volatility heading 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, which translates to a 2.3% decline in the few hours.

Despite this, the meme coin is still up by 29% in the past seven days.

It is crucial to remain patient with the Dogecoin outlook, especially as the RSI is now indicating 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 are at their highest levels 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%.

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