Dogecoin (CRYPTO: DOGE) was continuing its northward ascent Friday, rising about 1.6% higher in a continued bullish reaction to a double bottom pattern the crypto printed on April 11 and April 12.
A double bottom pattern is a reversal indicator that shows a stock has dropped to a key support level, rebounded, back tested the level as support and is likely to rebound again. It is possible the stock may retest the level as support again, creating a triple bottom or even quadruple bottom pattern.
The formation is always identified after a security has dropped in price and is at the bottom of a downtrend, whereas a bearish double top pattern is always found in an uptrend. A spike in volume confirms the double bottom pattern was recognized, and subsequent increasing volume may indicate the stock will reverse into an uptrend.
- Aggressive bullish traders may choose to take a position when the stock’s volume spikes after the second retest of the support level. Conservative bullish traders may wait to take a position when the stock’s share price has surpassed the level of the initial rebound (the high before the second bounce from the support level).
- Bearish traders may choose to open a short position if the stock rejects at the level of the first rebound or if the stock falls beneath the key support level at which it created the double bottom pattern.
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The Dogecoin Chart: The bullish reaction to the double bottom pattern at the $0.133 level caused Dogecoin to reverse course into an uptrend, with the most recent higher low printed on Thursday at the $0.136 level and the most recent higher high printed on Friday at the high-of-day.
If the crypto continues in its uptrend, it will eventually need to fall down to print another higher low, which could offer bullish traders who aren’t already in a position a solid entry point.
- On Thursday, when Dogecoin closed the 24-hour trading session above the eight-day exponential moving average (EMA), it negated a possible bear flag pattern, which may give bullish traders more confidence going forward. On Friday, the crypto tested the eight-day EMA as support and held above the level.
- Dogecoin is having difficulty gaining momentum due to lower-than-average volume. At press time, Dogecoin’s volume on Coinbase Global Inc (NASDAQ:COIN) was registering in at only about 201 million compared to the 10-day average of 389 million.
- The 50-day simple moving average (SMA), which is trending just above the 13-cent level, has begun to curl upwards, which is a positive sign for the bulls.
- If big bullish volume eventually comes in and Dogecoin is able to soar up above the 200-day SMA and trade above the level for a period of time, the 50-day SMA will eventually cross above the 200-day, which would cause a golden cross to occur on the chart to indicate the crypto is in a bull market.
- Dogecoin has resistance above at 16 cents and the $0.176 mark and support below at $0.146 and $0.135.
