Dogecoin DOGE / USD It rose more than 7% at some point during the 24-hour trading session on Thursday before dropping to trade 2% higher.
The cryptocurrency has been consolidating since Sunday, trading mostly sideways and within a number of inside bar patterns on low volume.
The consolidation was necessary after the cryptocurrency surged more than 150% between October 25 and October 29 following the news of it Tesla Corporation TSLA Executive Director Elon Musk Twitter The takeover is set to close.
See also: Dogecoin Rally Stops After Price Rally But There Is One Cryptocurrency Fee
Dogecoin The sharp rally coupled with mostly sideways consolidation may have turned the cryptocurrency into a bull flag pattern on the daily chart.
The bull flag pattern It is created with a sharp rise to the top that forms the column, which is then followed by a consolidation pattern that causes the stock to fall between a channel with parallel lines or into a narrow triangle pattern.
For bearish traders, “the trend is your friend” (so that doesn’t happen) and the stock or cryptocurrency may continue to fall or sideways within the next flag for a short period of time. Aggressive traders may decide to sell the stock or cryptocurrency at the upper trend line and exit the trade at the lower trend line.
- Bullish traders will want to watch for a breakout of the upper descending trend line of a flag formation, at high volume, for an entry. When a stock or cryptocurrency breaks out of a bull flag pattern, the measured upward movement is equal to the length of the bar and must be added to the lowest price within the flag.
- The bull flag is invalidated when the stock closes a trading day below the lower trend line of the flag pattern or if the flag drops more than 50% along the bar.
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Dogecoin chart: The Dogecoin flag is formed inside a triangle and traders and investors can watch for the cryptocurrency to break out or fall from the pattern on above average volume to indicate recognition of the bull flag. If Dogecoin breaks with the flag, a measured move could take the cryptocurrency towards the 27-cent mark.
- Dogecoin is set to reach the top of the flag on November 5, but if no significant volume is entered to break the cryptocurrency out of the pattern, the bullish flag will be nullified and Dogecoin may continue to trade sideways. If Dogecoin breaks out of the pattern and loses support at the eight-day exponential moving average, the flag will be invalidated, and a downtrend may occur.
- Within the triangle, Dogecoin has made a series of lower highs and higher lows with lower intraday range. Declining volatility combined with sideways trading within the flag helped bring the cryptocurrency relative strength index (RSI) down from 92% to around 76%.
- When the RSI of a stock or cryptocurrency measures around 70%, it is considered oversold. As the Dogecoin RSI rises, a breakout of the bullish pennant becomes less likely, although it should be noted that RSI levels can remain extended for extended periods.
- Dogecoin has higher resistance at $0.135 and $0.146 and support just below 12 cents and just below the 10 cent level.
See also: Dogecoin, Bitcoin, and Ethereum Rally Paid After Fed Rate Rally – But One Major Cryptocurrency Still Shipped
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