Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE) are all trading higher in strong uptrends. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.
The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods. Traders can use moving averages to help identify an uptrend, with rising lower timeframe moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend and rising longer-term moving averages (such as the 200-day simple moving average) indicating a long-term uptrend.
A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows often take place at resistance and support levels.
In an uptrend the “trend is your friend” until it’s not, and in an uptrend there are ways for both bullish and bearish traders to participate in the stock:
- Bullish traders who are already holding a position in a stock can feel confident the uptrend will continue unless the stock makes a lower low. Traders looking to take a position in a stock trading in an uptrend can usually find the safest entry on the higher low.
- Bearish traders can enter the trade on the higher high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock makes a lower low, indicating a reversal into a downtrend may be in the cards.
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The Bitcoin Chart: Bitcoin reversed into an uptrend on March 14 and March 16, the crypto broke up from a descending channel pattern on the daily chart. The most recent higher low was printed on March 18 at $40,130 and if the crypto continues to trade above the level the uptrend will remain intact.
- On Sunday, Bitcoin looked to be printing another higher low under a resistance level at $42,223. Traders and investors can watch for the crypto to hold above the eight-day exponential moving average (EMA) on the pullback for confidence going forward.
- The retracement on Sunday was being made on lower-than-average volume, which is a positive sign for the bulls. By late afternoon, Bitcoin’s volume was measuring in at about 6,075 compared to the average 10-day volume of 15,176. When a security moves lower on lower-than-average volume, it indicates healthy consolidation is taking place.
- Bitcoin has resistance above the $42,223 level at $45,814 and $48,475 and support below at $39,600 and $38,105.
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The Ethereum Chart: Like Bitcoin, Ethereum reversed into a possible uptrend on March 14 and broke up from a descending triangle the following day. Ethereum hasn’t printed a higher low to confirm the trend, but may be in the process of printing one on Sunday.
- Ethereum could also be settling into a bull flag pattern on the daily chart, with the pole formed between March 14 and March 18 and the flag beginning to form over the days since then. The measured move of the pattern, if the bull flag is recognized, is about 18%, which indicates Ethereum could trade up toward the $3,300 level.
- Ethereum has resistance above at $2,890 and $3,057 and support below at $2,609 and $2,461.
The Dogecoin Chart: Dogecoin reversed into an uptrend on March 14 and formed its most recent higher low at the $0.114 level on Friday, and its most recent higher high was printed on Saturday at $0.125.
- Like Bitcoin and Ethereum, Dogecoin could be printing its next higher low on Sunday. Alternatively, Dogecoin may fall lower on Monday to back test the upper descending trendline of a falling channel pattern the crypto broke up bullishly from on Saturday.
- If Dogecoin holds above the pattern and forms a bullish reversal candlestick on Monday, it may give traders who are not already in a position a solid entry point.
- Dogecoin has resistance above at $0.135 and $0.146 and support below at $0.106 and the important 10-cent psychological level.
