Dogecoin (CRYPTO: DOGE) was trading slightly lower on Wednesday afternoon, after attempting and failing to break up from a descending trendline that has been holding the crypto down since April 8.
A descending trendline acts as a resistance level and indicates there are more sellers than buyers, as the price continues to fall.
In order for a trendline to be considered valid, the stock or crypto must touch the line on at least three occasions. After that, the more times the trendline is touched, the weaker it becomes.
- Bullish traders can watch for a stock or crypto to break up from the descending trendline and, if the break happens on high volume, can indicate the downtrend is over and a rally may be on the horizon. It's possible the stock or crypto may fall down to back-test the descending trendline as support before heading higher again.
- For bearish traders, “the trend is your friend” (until it’s not) and a touch and rejection of the descending trendline can offer a good short entry. A bearish trader would stop out of this type of trade if the stock or crypto broke above the trendline.
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The Dogecoin Chart: Under the descending trendline, Dogecoin has been making a series of lower highs and higher lows, which has also set the crypto into a tightening triangle pattern on the daily chart. The most recent confirmed lower high was printed on April 14 at the $0.149 level, and the most recent higher low was printed at the $0.133 level on April 18.
- On Wednesday, Dogecoin was trading on lower-than-average volume, which indicates a lack of interest in the crypto from both the bulls and the bears. At press time, Dogecoin’s volume was measuring in at only about 156 million on Coinbase Global, Inc (NASDAQ:COIN), compared to the 10-day average of 244.89 million.
- Bulls want to see big bullish volume come in to break Dogecoin up from the descending trendline, which could indicate a large reversal to the upside is in the cards. Bears want to see the crypto continue to reject the trendline until Dogecoin loses support at the $0.132 mark, which could indicate a downtrend is on the horizon.
- Dogecoin has resistance above at $0.146 and 16 cents, and support below at $0.135 and the 12-cent level.
See Also: Why Dogecoin Founder Likes 'Bitcoin Maxi' Jack Dorsey
