According to Cointelegraph, Dogecoin (DOGE) has entered a minor correction following its impressive 48% rally earlier in October. As of Oct. 23, the memecoin has dropped over 9.5% from its local high of $0.149 established two days ago. This includes a 6.5% decline in the last 24 hours, bringing DOGEâs price down to $0.135, its lowest in a week. The pullback appears to be driven by profit-taking, with increasing risk-off sentiment among investors adding to the selling pressure.
DOGEâs price started dropping after its daily relative strength index (RSI) reading crossed above 70, a threshold that typically signals an "overbought" condition and precedes a period of correction or consolidation. Traders likely began securing profits, anticipating that the price had peaked in the short term. Their bearish response to DOGEâs overbought RSI is consistent with previous instances when the RSI crossed above 70, triggering sharp price corrections. For instance, DOGEâs price dropped by 23.50% in late September after its daily RSI entered the overbought zone.
Dogecoinâs ongoing price drop coincides with the prospects of its key exponential moving averages (EMA) forming a golden cross, an event that has coincided with larger price drops in recent months. A golden cross occurs when an assetâs short-term moving average crosses above the long-term moving average, typically seen as a bullish signal indicating the potential for a sustained uptrend. However, in Dogecoinâs case, golden crosses have not led to immediate buying. Instead, anticipation of the crossover often drives early buying activity, creating overbought conditions. This seems to be playing out again, as previous 50-200 EMA golden cross formations in November 2023 and December 2022 were followed by price declines of roughly 18.5% and 13.8%, respectively.
As of Oct. 23, DOGEâs 50-day EMA is approaching a crossover with the 200-day EMA, driven by its 48% surge earlier this month. However, with the golden cross nearing, early buyers are likely locking in profits, contributing to the ongoing pullback. Should the selloff continue, DOGEâs downside target for November will likely be its moving averages, currently at around $0.111.
Dogecoinâs ongoing price decline aligns with a surge in US Treasury yields, signaling diminishing recession risks and raising the likelihood that the Federal Reserve may slow its pace of interest rate cuts in the coming months. On Oct. 23, the two-year Treasury yield climbed above 4%, its highest level in two months, while the benchmark 10-year yield reached 4.24%, a three-month peak. Rising yields typically reflect improved economic conditions, which can reduce investor appetite for âriskierâ assets like cryptocurrencies, including Dogecoin. As a result, DOGE has faced downward pressure as the opportunity cost of holding safer, yield-bearing assets rises in the short term.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
