Dogecoin rally breaks if it fails to break $0.125... Analyst: "Rebound is still counter-trend"

▲ Dogecoin(DOGE)

Dogecoin (DOGE) has rebounded strongly from recent lows, but as it enters a key resistance zone, this rise has reached a critical juncture to determine whether it is a trend reversal or a short-term rebound.

According to crypto media NewsBTC on May 7 (local time), Kevin, a crypto analyst at Kev Capital TA, diagnosed that Dogecoin's recent recovery remains a "counter-trend rally" without confirmation of a broader market reversal for Bitcoin (BTC). Kevin explained in a May 6 market update that Dogecoin moved in line with his previous expectation that it was likely to rebound from oversold territory.

Kevin stated that he entered a Dogecoin position around $0.09, and at the time of recording, the trade's return was approximately 26.6%. However, he characterized this rise as a tactical rebound rather than a definitive trend reversal. He said, "When analyzing altcoins, the first thing to do is analyze Bitcoin and USDT dominance charts. Then, look at pair charts like Dogecoin vs. Bitcoin, and finally, analyze individual dollar charts."

Dogecoin's immediate technical focus is the resistance zone formed between $0.117 and $0.125. Kevin identified $0.117 as the Fibonacci 0.786 retracement level and explained that Dogecoin is already pressing against this zone. Just above it lies the 200-day exponential moving average and the 200-day simple moving average around $0.124 to $0.125, which he assessed as "very significant resistance" for the entire zone.

The reason this zone is important is that Dogecoin's rebound is hitting a wall similar to the high-timeframe resistance Bitcoin is facing. Kevin viewed Bitcoin's entry into the $82,000 to $87,000 range as still technically a counter-trend move. USDT dominance is approaching his previously indicated target zone of 6.6% from 6.8%. He stated, "If this move is a counter-trend rally, it has already become quite extended," adding, "If a different trend emerges and it returns to a high-timeframe uptrend, it would break the four-year cycle narrative that the mid-cycle year should see a downturn into Q4."

For a bullish scenario to materialize, Kevin believes Bitcoin must break out towards $95,000 to $100,000 and then reconfirm key moving averages and Fibonacci zones as support. If Dogecoin consistently breaks through the first resistance zone, it could open up an upper target zone between $0.136 and $0.159. Kevin explained that this zone is a stronger resistance area where the Fibonacci 0.703 level and the golden pocket overlap, and it is a key zone where Dogecoin has previously faced resistance.

Momentum indicators are also sending short-term overheating warnings. Kevin pointed out that Dogecoin's daily Relative Strength Index (RSI) has risen to around 81, a level rarely seen in recent years. He said, "81 is a high number. It can go higher, potentially into the mid-80s or even 90s. But it's important to remember that the RSI is in a very high position. It's highly likely that we will start preparing for some form of pullback in the coming days." Although Dogecoin's money flow has turned from a very deep red zone to a green zone after a prolonged bearish trend, Kevin emphasized that if the $0.117 to $0.125 resistance fails to break, it is necessary to check whether the 4-hour major moving averages hold as support.

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