Dogecoin DOGE/USD was trading flat on Wednesday afternoon in a continued consolidation phase, after skyrocketing 19% between March 26 and Monday.
The rise up paired with the two-day consolidation phase has settled the crypto into a bullish flag pattern on the daily chart. The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines.
- For bearish traders, the “trend is your friend” (until it’s not) and the stock may continue downward within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
- Bullish traders will want to watch for an upward break through the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.
A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern, or if the flag falls more than 50% down the length of the pole.
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The Dogecoin Chart: The measured move of Dogecoin’s daily bull flag pattern is about 19%, which indicates the crypto could trade up over the 16-cent level in the future. Bullish traders can watch for a break up from the upper descending trendline of the flag pattern on higher-than-average volume to gauge whether the pattern was recognized.
- Dogecoin is also trading in a confirmed uptrend, with the most recent higher low created on March 25 at the $0.127 level and the most recent higher high formed at the $0.153 level on Monday. If Dogecoin closes the 24-hour trading session above 14 cents, it will print a bullish hammer candlestick on the daily chart, which may indicate the next higher low is in, and the crypto will trade higher on Thursday.
- The recent consolidation has caused Dogecoin’s relative strength index (RSI) to drop from about 65% to 63%, which may give the crypto room to trade up higher in the near future. Traders can watch for a pullback to occur if Dogecoin’s RSI reaches or exceeds the 70% level, which could prompt profit takers to come in and add some selling pressure.
- Dogecoin is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators and on Wednesday, Dogecoin tested support at the eight-day EMA and held above the level.
- Dogecoin has resistance above at $0.146 and 16 cents, and support below at $0.135 and the 12-cent level.
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