Dogecoins DOGE/USD was up over 7% at one point during Thursday’s 24-hour trading session, before falling to trade around 2% higher.
The crypto has been consolidating since Sunday, mostly trading sideways and within a series of inside bar patterns on decreasing volume.
The consolidation was required after the crypto surged over 150% between Oct. 25-29 following the news Tesla Inc TSLA CEO Elon Musk’s The acquisition of Twitter should be completed.
See Also: Dogecoin Rally Halts After Rate Hike But 1 Crypto Fees Ahead
Dogecoin’s sharp rise coupled with mostly sideways consolidation may have placed the crypto in a bull flag pattern on the daily chart.
The bull flag pattern is created with a sharp rise to the upside that forms the pole, which is then followed by a consolidation pattern that takes the stock down between a parallel line channel or into a narrowing triangle pattern.
For bearish traders, the “trend is your friend” (until it isn’t) and the stock or crypto may go down or sideways within the following flag for a short period of time. Aggressive traders may decide to sell the stock or crypto at the upper trendline and exit trading at the lower trendline.
- Bullish traders should watch for a breakout from the upper descending trend line of the flag pattern on high volume to enter. When a stock or crypto breaks out of a bull flag pattern, the upward movement measured is the length of the bar 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 when the flag falls more than 50% down the pole.
Would you like a direct analysis? Find me in the BZ Pro Lounge! Click here for a free trial.
The Dogecoin chart: Dogecoin’s flag formation occurs within a triangle, and traders and investors can watch for the crypto to break out or fall from the pattern on above-average volume to indicate that the bull flag has been spotted. If Dogecoin breaks away from the flag, the measured movement could take the crypto towards the 27 cent mark.
- Dogecoin is expected to top the flag on November 5, but unless significant volume comes in to break the crypto out of the pattern, the bull flag will be negated and Dogecoin could 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 negated and a downtrend could occur.
- Inside the triangle, Dogecoin has made a series of lower highs and higher lows as the daily trading range narrows. Declining volatility coupled with sideways trading within the flag has helped bring the crypto’s Relative Index of Strength (RSI) down from 92% to around 76%.
- When a stock or crypto’s RSI is around 70%, it is considered to be in oversold territory. Due to Dogecoin’s elevated RSI, a bull flag breakup is becoming less likely, although it should be noted that RSI levels can remain extended for long periods of time.
- Dogecoin has resistance above at $0.135 and $0.146 and support below at 12 cents and just below the 10 cent level.
Also Read: Dogecoin Rally Halts, Bitcoin, Ethereum Down After Fed Rate Hike – But 1 Major Crypto Still Storms Ahead