Dogecoin DOGE/USD was flying 8% higher on Tuesday after breaking up from a bull flag pattern on Monday, which Benzinga called out the day prior.
The move higher also confirmed Dogecoin is still trading in an uptrend pattern on the daily chart. 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 timeframe moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend and rising longer-term moving averages (such as the 200-day simple moving average) indicating 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.
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The Dogecoin Chart: Dogecoin confirmed the uptrend is still intact on Monday when the crypto printed a higher high above the most recent March 28 high of $0.153. On Tuesday, bullish momentum came into the crypto and pushed Dogecoin higher still.
- The measured move of the break up from the bull flag is 40%, which indicates Dogecoin could trade up toward 18 cents in the future but may make one or more higher lows before reaching that level, which would give bullish traders who aren’t already in a position a solid entry point for a swing.
- The move higher on Tuesday was on higher-than-average volume, which further indicates the crypto is receiving momentum. By late morning, Dogecoin’s volume was already registering in at over 562 million compared to the 10-day average of 315.19 million.
- The eight-day exponential moving average (EMA) has been guiding the crypto higher and is acting as a strong support level. For short-term traders, a loss of the eight-day EMA on the daily chart could act as an area to place a stop loss.
- Dogecoin has resistance above at $0.176 and $0.196 and support below at $16 cents and $0.146.
See Also: How to Read Candlestick Charts for Beginners
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