Technical Analysis on $DOGE: How I Captured a 23.14% ROI

Technical Analysis on $DOGE: How I Captured a 23.14% ROI

Yesterday, I closed a profitable Dogecoin ($DOGE) trade on Bybit with a 23.14% ROI. Here’s a look at the PnL from the trade:

Trade Summary

• Instrument: $DOGE
• Entry Price: 0.19874
• Exit Price: 0.20334
• Return on Investment (ROI): 23.14%

Technical Analysis: Why I Entered the Trade

When analyzing $DOGE, I noticed a few key indicators that pointed toward a potential upward movement:

1. Support at $0.19850:
   $DOGE had been trading near a crucial support level around $0.19850, where it had previously found buying interest. This level aligned with recent lows, indicating a potential bounce if buyers stepped in again.

2. Oversold RSI on the 4-Hour Chart:
   On the 4-hour timeframe, the Relative Strength Index (RSI) had recently dipped below 30, indicating oversold conditions. This typically suggests that selling pressure may be exhausted, and a reversal could be imminent. When RSI recovers from oversold levels, it often attracts buyers looking to catch a bounce.

3. Bullish Divergence:
   Additionally, a bullish divergence was forming between the RSI and price action. While $DOGE had been making lower lows, the RSI began to form higher lows, signaling a potential trend reversal. This divergence increased my confidence in a bounce from the $0.19850 support level.

Exit Strategy: Capturing Profits at $0.20334

After entering the trade at 0.19874, I set a target near 0.20334, which was slightly below the next resistance level around 0.20500. My goal was to capture a healthy gain while avoiding the risk of a pullback near resistance. Here’s why this level made sense for my exit:

1. Resistance at $0.20500:
   The $0.20500 level had acted as resistance in recent sessions, and I anticipated potential selling pressure as $DOGE approached this level. By exiting just below it, I was able to lock in my profits without risking a reversal.

2. Strong Upward Momentum:
   The price action leading to $0.20334 showed strong upward momentum, supported by volume, which helped to confirm my exit point as a sensible spot to take profits.

Key Takeaways from the Trade

This trade offered a great example of using support and resistance levels, RSI analysis, and divergence to time entries and exits. The confluence of these technical indicators helped me feel confident in entering the trade and sticking to my exit strategy.

As $DOGE continues to develop, I’ll be watching for further patterns and indicators that could suggest either a continuation or a reversal of this recent momentum. By understanding and using technical analysis, we can make more informed trades and manage risk effectively.

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Stay tuned for more trading insights and technical analysis as we continue to track opportunities in the crypto market!