The Dogecoin/Bitcoin pair launched its bull run on December 24, 2017 when it broke out of the resistance level of 0.0000005. The momentum it carried was so strong that it more than doubled its value in about two weeks. On January 7, 2018 the market went as high as 0.00000114. At this price point, however, the market was in extreme overbought territory. Traders who bought the breakout at 0.0000005 took the chance to take profits.
As selling commenced, the market broke below 0.000001 on January 8. The price continued to drop until February 2 when the market went as low as 0.00000035. At that price level, bulls rushed in and brought the market back to 0.00000051. The price action on that day may have signalled the end of the correction.
Technical analysis show that the market is creating a bullish higher low setup at 0.0000005 support. The price action on February 2 created a massive hammer candlestick which indicates the presence of buyers in this area. In addition, volume spiked to 1,003 bitcoins on that day, when the average daily volume is around 200 bitcoins. This suggests that the market has capitulated.
The strategy is to wait for the market to stabilize at 0.0000005. Should bulls defend that level, the market will most likely restart its climb up to 0.000001. The entire process can take two months.
Daily Chart of Dogecoin/Bitcoin on Poloniex
As of this writing, the Dogecoin/Bitcoin pair is trading at 0.00000051 on Poloniex.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
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