Dogecoin Is Approaching a Golden Cross: What Does This Mean for Traders?

Dogecoin (DOGE) may be ready to reward long-term holders and traders if the market’s reading of the cryptocurrency tea leaves is correct. The original meme coin is heading in a direction known in trader parlance as the “golden cross”.

What does that mean? Let’s take a closer look at DOGE TA. So if you don’t like the lines on the chart, the rest probably won’t suit you either.

Of course, Dogecoin fell today, down 1.9% to $0.145, but the weekly performance remains positive. DOGE is up 5% over the past seven days. Zooming out, this upward trend continues despite the correction that has occurred over the past four days.

If you look a little closer, there are even more reasons for optimism. The 50-week simple moving average (SMA) of the token spot price is currently rising and should things continue to move in this direction. The Cross It will likely surpass the 200-week SMA in the coming weeks. The intersection will form the Golden Cross. This is something that has not happened to Dogecoin since early 2021. And that was just before DOGE hit the jackpot, reaching an all-time high of over $0.73 per coin just four months later.

Simply put, the formation of a golden cross means that new buyers are registering profits faster than long-term holders (who have had to endure previous poor performance). To traders, this signals a potential bullish market trend and is often interpreted as a strong buy signal signaling the end of a bearish trend and the beginning of a bullish phase.

So how did DOGE come to the brink of another Golden Cross? The first positive sign for Dogecoin’s price came last March when it broke its 200-week SMA, surging more than 70% in just one week. This move boosted SMA 200, breaking its previously flat performance. As mentioned, if the impending Golden Cross actually happens, it will be the first in over three years.

The previous golden cross occurred in January 2021, just before buyers sent the coins from $0.0096 in May of the same year to an all-time high of over $0.73. 8,000% Price rise. But most of you know what happened next. That huge surge was followed by a 90% drop in the months leading up to it. Dogecoin then stabilized between $0.05 and $0.10 from May 2022 to February 2024.

So what does it all mean? Well, even though this is how traders interpret such data and can often help guide their decisions and actions, it doesn’t mean it will happen again. So don’t pop the expensive champagne for the OG meme coin just yet.

After all, the golden cross is just one of many indicators that traders look at, and a prudent investor will consider risk management strategies and other factors.

For example, and perhaps most importantly, the market as a whole was in a completely different place in 2021. The macroeconomic situation has changed and geopolitical turmoil is currently causing panic among market participants. So when trying to time the market for maximum profits, it is important to keep in mind that while history may often rhyme, lightning rarely strikes twice.