In a notable development, meme coin Dogecoin is now flashing a sell signal for a correction after a 30% price surge in seven days.
Dogecoin's price surged to an unprecedented level in October, catching many investors off guard. However, according to cryptocurrency analyst Ali Martinez, the meme coin could actually experience some short-term price corrections before continuing its upward trend.
His assessment is based on signals provided by the TD Sequential indicator, a technical tool known for its ability to identify market exhaustion points.
Dogecoin May Be Overbought
In a recent post on X, Martinez highlighted a TD Sequential setup on the Dogecoin/TetherUS daily candlestick chart. This analysis shows that Dogecoin is now experiencing its ninth consecutive bullish close on the daily candle, matching the TD Sequential indicator’s ninth count. While Dogecoin’s continued rally is impressive, it also indicates that the meme coin may be reaching a critical point where the price could retrace.
Adding to the caution, this sell signal coincides with a newly established overbought condition for Dogecoin. The Relative Strength Index (RSI) has shown that recent buying momentum has pushed Dogecoin deep into overbought territory.
At the time of writing, the RSI 14 closed at a high of 75.80, having recently peaked at 78.36, which is its highest level since March. This overbought condition suggests that the buying frenzy may not be sustainable, increasing the likelihood that prices will soon fall again.
Is it time to sell DOGE?
Martinez’s observations serve as an important reminder of Dogecoin’s volatility leading into the new week. At the time of his analysis, Dogecoin was trading at $0.14575. However, at the time of writing, Dogecoin had dropped to $0.1424, representing a 2.3% drop in a matter of hours. Even so, the meme coin is still up 29% over the past seven days.
However, it is important to be patient with Dogecoin's outlook, especially as the RSI is currently indicating overbought conditions. On the other hand, Dogecoin is not the only cryptocurrency in overbought conditions, as the entire market is currently in a state of greed, according to the Fear and Greed Index.
If the 24-hour correction for DOGE extends throughout the rest of the week, the price could drop below $0.14 in the short term and return to $0.13.
Crowd attention and discussion around Dogecoin remains at its highest level since March. This suggests that any correction is likely to be temporary and that the uptrend is likely to continue as the new week begins. According to one crypto analyst, Dogecoin is on track to gain over 400%.
