Dogecoin Signals Sell After 30% Surge: Is a Correction Coming?

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In a significant turn of events, the meme coin Dogecoin is currently showing signs of a sell signal for potential corrections after experiencing a 30% surge over the past week.

The Dogecoin price has been on an extraordinary rise throughout October, catching many investors who have been waiting on the sidelines off guard. However, crypto analyst Ali Martinez suggests that the meme coin might be facing a short-term price correction before seeing a resumption of the upwards trend.

His analysis is based on the signal generated by the TD Sequential indicator, a technical tool recognized for pinpointing market exhaustion points.

Dogecoin May Be Overbought

In a recent post on X, Martinez emphasized the TD Sequential setup visible on the Dogecoin/TetherUS daily candlestick chart. This review indicates that Dogecoin is currently undergoing its ninth consecutive bullish close on the daily candlestick, aligning with the ninth count from the TD Sequential indicator. While this ongoing surge in Dogecoin’s price is noteworthy, it also suggests that the meme coin may be approaching a critical juncture where a price retracement could happen.

Further emphasizing caution, this sell signal overlaps with a newly established overbought condition for Dogecoin. The Relative Strength Index (RSI) indicates that the recent buying momentum has pushed Dogecoin deep into the overbought zone.

At the time of this writing, the RSI 14 close is at a high 75.80, having recently peaked at 78.36, which is the highest level since March. This overbought status hints that the current buying spree may not be sustainable, increasing the possibility of a pullback in the near future.

DOGE market cap currently at $21 billion. Chart: TradingView

Is It Time To Sell DOGE?

Martinez’s observations serve as an essential reminder of Dogecoin’s volatility as the new week approaches. At the moment of his analysis, Dogecoin was priced at $0.14575. However, as of this writing, Dogecoin has decreased to $0.1424, reflecting a 2.3% drop in just a few hours. Despite this, the meme coin still retains a 29% increase over the last week.

Nonetheless, it is vital to remain cautious regarding the Dogecoin outlook, particularly as the RSI is now indicating an overbought condition. Conversely, Dogecoin is not the only cryptocurrency experiencing overbought conditions, as the overall market sentiment has shifted to a greed state, according to the Fear and Greed Index.

Should the 24-hour correction for DOGE continue through the weekend, it may lead to a drop below $0.14 in the short term and potentially revisit the $0.13 range.

Public interest and discussion around Dogecoin are currently at their highest levels since March. This suggests that any corrections might be short-lived, with a strong likelihood of the upward trend reestablishing itself as the new week begins. According to one cryptocurrency analyst, Dogecoin is on track for a price rally exceeding 400%.

Featured image from Medium, chart from TradingView