Dogecoin. You either love it or you hate it. The popular crypto took off earlier this year on Elon Musk (and other celebrity) tweets. It was equivalent to the WallStreetBets retail traders buying AMC and Gamestop. In fact, a lot of the people trading Doge do use the term “ape” or “aping” into Doge. Doge is often referred to as a “meme coin” due to its following and the fact that they talk about it being a world reserve currency some day.
I love the idea of new people entering the markets and taking their financial matters into their own hands. I mean the reason I write daily Market Moment posts, and post on Equity Guru’s Discord channel is to help people surf the financial markets. I believe markets can change the lives of people for the better…and sometimes in the beginning, for the worst.
Now some people rip on those trading the meme stocks and the meme coins. Fair enough. But it is likely they never traded before. I remember when I first began trading way back in 2012. Was I jumping into prudent investing? Initially I did. But then after 1 month I got bored. I was lured into the world of penny stocks and trading literally crap companies. Trying to get rich quick with my small account. Sometimes there were some home runs. But often, it was me getting clapped. Newsletter writers telling you to buy when it was them selling it to you.
What I am trying to say is that this was valuable experience. I think many people entering the financial markets do begin trading high risk speculative assets. The whole idea of fast moving markets and getting rich quick is sort of the image Hollywood and Mainstream Media has created for trading. Naturally, new money thinks that this is how it is.
The reason I like new money trading stocks, even if it is meme stuff, is because hopefully they will learn from the positive and negative experiences, and then be eager to learn and become better investors or traders. A lot of people will say, “Yea Vishal but the experience these people will get is losing a bunch of money”. Sure it may be painful, but it still would be a lesson.
Anyhoo, enough of me being philosophical. Let’s talk about Doge! Write off the bat I want to say that this post is about TRADING the coin. Not necessarily INVESTING and holding onto it for the long term. To me, a lot of these crypto alt coins are speculations. We really do not know what long term value they have, or if their projects will be successful. This is why I prefer holding the major crypto’s (Bitcoin, Ethereum, Litecoin etc) and trade the alts.
The #DWord was trending yesterday and when I looked at the chart, my jaws dropped. Regular readers of Market Moment, and members of our Discord Channel can recognize the structure we are looking at. These are the type of set ups we love for trades.
I tweeted a few confluences I see to the upside and the tweet was well received by the Doge community. Thank you guys, you made me feel like the Doge Father just for one day.
The OG Doge Father though is Elon Musk.
He may not tweet about Doge and other crypto’s too often now a days, but he still talks about them off of social media. The B word conference featuring Jack Dorsey, Cathie Wood, and Elon Musk was highly anticipated and provided some good volatility on crypto for the day traders. The whole idea of the conference is to promote institutions to open up to Bitcoin and cryptocurrency in general.
Digital currencies are going mainstream and are here to stay. In this new economy, money will have to move faster and Blockchain and crypto’s provide that solution. Maxing transaction rates and lowering transaction costs. The only risk I see is governments getting involved and heavily regulating crypto’s. And then there is the little thing known as Central Bank Digital Currencies. But these are topics that I have recently discussed, and will continue to going forward.
Back to the B word conference. In terms of Bitcoin, Elon Musk did confirm that not only does Tesla hold some, but SpaceX as well. Also, it is ‘likely’ Tesla will restart Bitcoin support payment. He also confirmed that not only is he holding Bitcoin and Dogecoin, but also Ethereum.
For the Doge holders, here are some interesting comments from Musk quoted from this Forbes article:
“Bitcoin by itself simply cannot scale to become the monetary system for the world at base layer,” Musk said, arguing bitcoin will “struggle to become peer-to-peer cash” without the adoption of a second layer network.
“There may be some merit in combining something like ethereum and dogecoin,” Musk said, revealing he owns some Ethereum tokens in addition to his bitcoin and dogecoin.
“The doge community is somewhat irreverent. It has great memes and doesn’t take itself too seriously,” Musk, said, repeating a phrase he’s used before: “The most entertaining outcome is the most likely one.”
And remember folks: Elon might pump, but he doesn’t dump. He wants these projects and coins to succeed.
Onto what you have all been waiting for, the Dogecoin chart. Doge had a nice uptrend and run to about 0.75 cents before falling hard. The coin is down nearly 80% since Elon’s SNL appearance. As noted previously, these are the type of charts I love to trade. My market structure method indicates that there are only three ways ALL MARKETS move: uptrend, range, downtrend.
These trends move in cycles. Nothing moves up forever, nothing moves down forever, and ranges can last for a very long time. These trends keep moving until they hit MAJOR support (price floor) or resistance (price ceiling) levels.
Doge has been in a prolonged downtrend with multiple waves (lower highs) and has now hit a major support zone at around $0.16. You can see by the candles that the buyers/apes are stepping in and defending support. They are holding the line.
Notice the last time we tested $0.16 we bounced? This could be the second time, hence the chance of printing what is known as a double bottom. A quintessential reversal pattern.
I have also drawn a trendline connecting the recent highs. The slope of the trendline still indicates a downtrend, but we have the possibility to break above this very soon. I should finally note that we did print what can be defined as an engulfing candle yesterday at support.
So what does this all mean? We have 4 major confluences: support retest, double bottom, engulfing candle, potential trendline break. I would also throw in a large wick candle trapping bears, and even a cross over of my Moving Averages. Things are looking bullish for Doge. Trading is a business of probabilities, and we try to align as many confluences as we can to increase our probability of success.
Upside targets would be $0.30, then the $0.45 zone. Both are pretty important resistance zones. Finally previous highs at around $0.75 and then the moon?
How would I enter as a trade? You can buy now frontrunning a breakout. But I would wait for the DAILY candle to close above the trendline, or above $0.20. We nearly got that yesterday but instead we sold off. A lot of the future movement will move depending on what Bitcoin does. Read yesterday’s piece on the urgent Bitcoin price action. Major level being tested which will either make or break crypto’s for the year.
My favorite timeframe for swing trading is the 4 hour chart. And Dogecoin looks even better on this chart! When you have both the daily and the 4 hour signaling bullish price action, it usually is a good sign.
Some of you with a technical eye might see it. Do you see it? It looks like we are forming the right shoulder in an inverse HEAD AND SHOULDERS PATTERN. My favorite reversal pattern. The entry? Await for the break and close above $0.20 to confirm and trigger the reversal pattern.
Doge army prepare! The DWord will be making headlines again, and the liftoff countdown has begun!