DOGE → First Sell-off Complete! Another Push to the Downside?
Updated
Dogecoin, along with the rest of the crypto market, had a severe bear response to Bitcoins completion of its measured move. Are we in for another leg down?
How do we trade this? 🤔
I don't think it's reasonable to short here, not yet at least. We need a little more recovery from the first sell-off toward the Resistance Zone at $0.0865. If we get a sell signal from that area, it's reasonable to short Doge on the Daily chart toward the initial support of $0.0675. Until then, it's best to wait on the sidelines for the RSI to come up, and the bears to recharge.
It may be a while before Doge recovers and heads to a new high in this trend. The macro-trend is bullish in the crypto market, so we should be cautious when capturing these bearish movements on altcoins.
💡 Trade Idea 💡
Short Entry: $0.0835
🟥 Stop Loss: $0.0890
✅ Take Profit: $0.0725
⚖️ Risk/Reward Ratio: 1:1
🔑 Key Takeaways 🔑
1. Bull Channel Concluded with a Double Top Reversal.
2. Trend Changed to Trading Range then 1st Push Down.
3. Bounced off of 200EMA Support, wait for new Sell Signal.
4. RSI at 36.00 and below Moving Average. Bias to Short.
5. Wait for Sell Signal After Test of Resistance Area.
💰 Trading Tip 💰
Channels are often concluded not with a strong reversal, but first a stall of the trend with a trading range. A reversal is likely if the trading range comes at the end of a three-leg trend.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and comment if you found this analysis useful!
How do we trade this? 🤔
I don't think it's reasonable to short here, not yet at least. We need a little more recovery from the first sell-off toward the Resistance Zone at $0.0865. If we get a sell signal from that area, it's reasonable to short Doge on the Daily chart toward the initial support of $0.0675. Until then, it's best to wait on the sidelines for the RSI to come up, and the bears to recharge.
It may be a while before Doge recovers and heads to a new high in this trend. The macro-trend is bullish in the crypto market, so we should be cautious when capturing these bearish movements on altcoins.
💡 Trade Idea 💡
Short Entry: $0.0835
🟥 Stop Loss: $0.0890
✅ Take Profit: $0.0725
⚖️ Risk/Reward Ratio: 1:1
🔑 Key Takeaways 🔑
1. Bull Channel Concluded with a Double Top Reversal.
2. Trend Changed to Trading Range then 1st Push Down.
3. Bounced off of 200EMA Support, wait for new Sell Signal.
4. RSI at 36.00 and below Moving Average. Bias to Short.
5. Wait for Sell Signal After Test of Resistance Area.
💰 Trading Tip 💰
Channels are often concluded not with a strong reversal, but first a stall of the trend with a trading range. A reversal is likely if the trading range comes at the end of a three-leg trend.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and comment if you found this analysis useful!
Note
The Doge price action continues to bleed slowly and after the massive 18.5% sell-off candle on January 3rd, the evidence points us toward more downward movement. I think it's reasonable to adjust my proposed trade to a short scalp at 1:1 Risk/Reward Ratio here, maintaining the original take profit $0.0725 and stop loss $0.0890. I would use half of the position size that would have been used on the original trade entry at $0.0835. If the price climbs up to that level again and gives us the short signal I originally advocated for, it's reasonable to take the other half of your equity and enter the market again at that level using the same stop loss and take profit.
Note
Doge continues to satisfy my analysis by remaining below the Daily 30EMA. If you took the proposed trade from the last update, I would remain in it. If you took profits at 1:1 Risk/Reward and moved your stop loss up to your entry, you were stopped out but took home at nice 6% profit! This trade remains valid until the 30EMA is broken to the upside at which point, the rest of you still in the trade will be stopped out.
As stated in most of my alt coin analysis, it's a good practice to use very small position sizes with such volatile currency pairs. For a pair like Doge, I wouldn't use more than 0.25% - 0.50% of my account equity on a single trade.
A new Doge analysis will be coming shortly! Let's see what the next few Daily candles provide.
-Joe Dean
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