Dogecoin (CRYPTO: DOGE) was trading over 7% higher during Sunday’s 24-hour trading session after breaking up bullishly from a double inside bar pattern, which Benzinga predicted would happen on Thursday.
The move higher also continues a solid uptrend the crypto has been trading in since bouncing off heavy support at the 5-cent mark on June 18.
An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.
The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods.
Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.
Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.
A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows often take place at resistance and support levels.
In an uptrend the "trend is your friend" until it’s not, and in an uptrend there are ways for both bullish and bearish traders to participate in the stock:
- Bullish traders who are already holding a position in a stock can feel confident the uptrend will continue unless the stock makes a lower low. Traders looking to take a position in a stock trading in an uptrend can usually find the safest entry on the higher low.
- Bearish traders can enter the trade on the higher high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock makes a lower low, indicating a reversal into a downtrend may be in the cards.
The Dogecoin Chart: Dogecoin’s most recent higher high in its uptrend was printed at the $0.069 level on June 21 and the most recent higher low was formed the following day at $0.061. On Sunday, Dogecoin surged up above the most recent higher high after falling lower briefly to test support at the eight-day and 21-day exponential moving averages.
- If Dogecoin closes the trading session near its high of day price, the crypto will print a bullish Marubozu candlestick, which could indicate higher prices will come again during Monday’s 24-hour trading day. The second most likely scenario is that Dogecoin will form another inside bar to consolidate Sunday’s sharp rise.
- If the crypto closes the 24-hour session with a long upper wick, Dogecoin could print a shooting star candlestick, which could indicate the next higher high has been formed, and the crypto will retrace lower over the coming days. If that happens, bullish traders can watch for the crypto to print a reversal candlestick above the most recent higher low in order to take a position.
- If Dogecoin continues to trade higher over the coming days, traders will want to see if the crypto can regain the 50-day simple moving average as support, which would give bullish traders more confidence going forward. If the crypto rejects the level, the 50-day may continue to push Dogecoin lower and negate the uptrend.
- Dogecoin has resistance above at $0.083 and just below 10 cents, and support below at $0.063 and the 5-cent mark.
See Also: So Which Will Happen First, Ethereum At $10K Or Dogecoin At $0.50?
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read at Benzinga