Dogecoin traders use a variety of tools to try and determine the direction in which the DOGE market is likely to head next. These tools can roughly be divided into indicators and chart patterns. When trying to predict the Dogecoin price, traders also try to identify important support and resistance levels, which can give an indication of when a downtrend is likely to slow down and when an uptrend is likely to stall.
Dogecoin Price Prediction Indicators
Moving averages are among the most popular Dogecoin price prediction tools. As the name suggests, a moving average provides the average closing price for DOGE over a selected time frame, which is divided into a number of periods of the same length. For example, a 12-day simple moving average for DOGE is a sum of DOGE’s closing prices over the last 12 days which is then divided by 12.
In addition to the simple moving average (SMA), traders also use another type of moving average called the exponential moving average (EMA). The EMA gives more weight to more recent prices, and therefore reacts more quickly to recent price action.
50-day, 100-day and 200-day moving averages are among the most commonly used indicators in the crypto market to identify important resistance and support levels. If the DOGE price moves above any of these averages, it is generally seen as a bullish sign for Dogecoin. Conversely, a drop below an important moving average is usually a sign of weakness in the DOGE market.
Traders also like to use the RSI and Fibonacci retracement level indicators to try and ascertain the future direction of the DOGE price.
How to read Dogecoin charts and predict price movements?
Most traders use candlestick charts, as they provide more information than a simple line chart. Traders can view candlesticks that represent the price action of Dogecoin with different granularity – for example, you could choose a 5-minute candlestick chart for extremely short-term price action or choose a weekly candlestick chart to identify long-terms trends. 1-hour, 4-hour and 1-day candlestick charts are among the most popular.
Let’s use a 1-hour candlestick chart as an example of how this type of price chart gives us information about opening and closing prices. The chart is divided into “candles” that give us information about Dogecoin’s price action in 1-hour chunks. Each candlestick will display DOGE’s opening price, closing price, as well as the highest and lowest prices that Dogecoin reached within the 1-hour period.
It’s also important to pay attention to the color of the candle – a green candle means that the closing price was higher than the opening price, while a red candle tells us the opposite. Some charts will use hollow and filled candlestick bodies instead of colors to represent the same thing.
What affects the price of Dogecoin?
Just like with any other asset, the price action of Dogecoin is driven by supply and demand. These dynamics can be influenced by fundamental events such as block reward halvings, hard forks or new protocol updates. Regulations, adoption by companies and governments, cryptocurrency exchange hacks, and other real-world events can also affect the price of DOGE. The market capitalization of Dogecoin can change significantly in a short period of time.
When trying to make a Dogecoin forecast, many traders also try to monitor the activity of DOGE “whales”, which are entities and individuals that control large amounts of DOGE. Since the Dogecoin market is relatively small compared to traditional markets, “whales” can single-handedly have a big influence on Dogecoin’s price movements.
Bullish and bearish price prediction patterns
Some traders try to identify candlestick patterns when making cryptocurrency price predictions to try and get an edge over the competition. Some candlestick formations are seen as likely to forecast bullish price action, while others are seen as bearish.
Here are some of the most commonly followed bullish candlestick patterns:
Here are some common bearish candlestick patterns:
- Hammer
- Bullish Engulfing
- Piercing Line
- Morning Star
- Three White Soldiers
- Bearish Harami
- Dark Cloud Cover
- Evening Star
- Shooting Star
- Hanging Man
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