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As the cryptocurrency market continues to navigate the current uncertainties, traders and analysts are keeping a careful eye on a potentially major technical formation for Dogecoin price: a moving average crossover on its weekly chart.
The nature of the crossing would determine whether it is a death cross, which is a bearish signal, or a golden cross.
A golden cross occurs when a shorter-term moving average, typically the 50-day moving average, crosses above a longer-term moving average, such as the 200-day moving average. This bullish signal is often interpreted as a strong indication of upward momentum and potential price increases.
While golden crosses can occur on various time frames, a weekly golden cross holds particular significance as it reflects longer-term trends and investor sentiment.
In the case of Dogecoin, the 50-week SMA is rising north and appears likely to move above the 200-week SMA, which may result in a golden cross formation in the coming weeks. While expectations are in place for a golden cross, traders might need to watch for the nature of the crossing to affirm this.
Dogecoin's journey toward this impending crossover has been marked by a series of ups and downs. Following a steady decline since May 6 from highs of around $0.168, the dog-themed coin has shown resilience, finding support around the $0.142 level.
At the time of writing, Dogecoin was trading down 4.68% in the last 24 hours to $0.144 as the crypto market faced selling pressure.
Implications of potential golden cross
The last time Dogecoin witnessed a weekly golden cross was in early January 2021, resulting in an astonishing 7,996% price increase over the next four months. Dogecoin later rose to an all-time high of $0.737 on May 8, 2021.
While past success is no guarantee of future results, the prospect of another golden cross has certainly captured the imagination of the DOGE community.
For traders, the golden cross is a signal to watch closely, as it could indicate the beginning of a new uptrend. However, it's important to approach such indicators with caution, as they can sometimes lead to false signals, trapping traders on the wrong side of the market.