On Monday, Dogecoin (CRYPTO: DOGE) continued to give back the gains, and more, that were propelled by Tesla, Inc’s (NASDAQ: TSLA) decision to begin accepting the crypto as payment for some of its merchandise.
Dogecoin soared over 25% higher at one point on Friday after Tesla listed some of the products for sale on its website in Dogecoin, including its Cyberwhistle and Cyberquad for Kids which cost 300 DOGE and 12,020 DOGE, respectively.
When Dogecoin hit 21 cents on Friday, the Cyberquad would have cost a customer the equivalent of $2,524.50 USD. Dogecoin's steep drop to Monday’s $0.165 low discounted that price to the equivalent of $1,983.30 USD, however, which highlights the difficulty businesses and consumers have when using Dogecoin and other cryptos as payment due to their inherent volatility.
The lower price of Dogecoin also may not be a red flag for the bulls because Dogecoin looks to be consolidating in an uptrend on the daily chart.
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The Dogecoin Chart: When Dogecoin hit a low of $0.151 on Jan. 10 bulls came in and bought the dip, which caused the crypto to print a hammer candlestick on the daily chart. A hammer candlestick is often a bullish reversal signal that marks the temporary bottom on a stock or crypto.
The hammer candlestick was recognized because over the following four 24-hour trading sessions Dogecoin soared up 57% to print a high on Friday at $0.215. On Monday, Dogecoin was trading about 5% lower but may just be preparing to print another higher low above the most recent higher low of $0.167, which was printed on Jan. 12. Traders can watch for Dogecoin to print another reversal candlestick above that level, such as another hammer candlestick or a doji, to indicate the crypto will reverse course to the upside again. If that happens, traders will then want to see if Dogecoin can print another consecutive higher high but if Dogecoin falls below the $0.167 level the uptrend will be negated. Dogecoin has resistance above at $0.176 and $0.196 and support below at $0.167 and the 15-cent mark.
