The bloody outlook across the crypto market resulted in a 7% nosedive in Dogecoin price in a week, following an impressive rally above $0.1.
This marked the biggest correction since the Q3 rally kicked off in October, with DOGE retracing from $0.105 to trade at $0.092 during the US session on Wednesday.
How Will Dogecoin Price React To FOMC Meeting
Bitcoin, Ethereum, and cryptocurrency majors remain suppressed ahead of the Federal Open Market Committee (FOMC) on Wednesday.
The Federal Reserve is widely expected to keep interest rates unchanged and provide insight as to when rate cuts could begin, especially with the recently released Consumer Price Index (CPI) data showing that inflation continues to ease.
Unchanged interest rates in the range of 5.25% – 5.50% are positive for risk assets like Bitcoin and Dogecoin while comments on rate cuts could prop the market for a rally.
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Dogecoin price holds above an important MA—the 20-day Exponential Moving Average (EMA) (in blue). A buoyant DOGE above this level would mean an incoming rebound.
However, losing the 20-day EMA as support which currently holds at $0.0929 may lead to a breakdown in such a way that Dogecoin price would be forced to retest other key levels like the 50-day EMA (in red) at $0.0817 and the 200-day EMA (in purple) at $0.0733 on the way to the local support, as highlighted by the descending trendline in in red.
Dogecoin price chart | Tradingview
The Relative Strength Index (RSI) reveals that sellers hold the reins at the moment, with Dogecoin likely to change the trend or continue spiraling while searching for solid support.
A bearish crossover in the RSI confirms the bearish narrative. However, DOGE could quickly snap out of the downtrend if the 21-day support holds.
Traders would be on the lookout for a bounce towards the pivotal $0.1 level. A successful retest of this resistance would assure investors of the strengthening bullish theory for gains above hurdles at $0.14 and $0.2, respectively.
Bulls have already started pushing for a recovery in shorter time frames like the four-hour chart, where Dogecoin is bouncing from the black ascending trendline.
Although the RSI is not oversold in this time frame, a recovery from support at 40 seems likely. Therefore, it may be prudent for traders to prepare to enter long positions with short-term targets at $0.1 and $0.12, respectively.
Dogecoin price chart | Tradingview
The Moving Average Convergence Divergence (MACD) indicator, although still bearish, has the potential to send a buy signal in this session or the next one.
Such a signal will occur as a bullish crossover with the the MACD line in blue moving above the signal line in red. Traders will be inclined to increase exposure to DOGE as the MACD generally moves toward the neutral line and enters the positive area.
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