The price of DOGE could rise by more than 150%, based on a classic bullish reversal setup known as a falling wedge.
A brutal correction witnessed in the Dogecoin (DOGE) market between May 2021 and February 2022, which saw the price fall by almost 85%, seems to have stopped this month.
DOGE/USD rebounds 30% in two weeks
DOGE experienced significant “buying down” when its price crashed to levels around $0.10 two weeks ago, resulting in a 30% bounce move to $0.14 as of March 27. Meanwhile, the coin’s bullish pullback originated from a support level that constitutes a “falling wedge” setup, signaling an extended bullish reversal in future weekly sessions.
In detail, a falling wedge pattern occurs when the price is trending lower while fluctuating between two converging, descending trend lines. In a perfect scenario, the setup results in the price breaking out of the downtrend range to the upside, rising as much as the maximum distance between the upper and lower trend lines of the wedge.
DOGE’s rebound from the lower trend line of the wedge two weeks ago opens up its chances of continuing the move higher towards the upper trend line near $0.18. Therefore, the break above the upper trend line further exposes the Dogecoin price rally towards $0.37, more than 150% from the current price.
DOGE Risks
Veteran trader Tom Bulkowski considers a falling wedge to be a “poor performer” when it comes to predicting bullish chart patterns, noting that its “misbalance is high and average price is low.” He cites a study of 800 trades showing that the chance of a falling wedge breakout meeting its upside target is almost 62%.
Furthermore, Dogecoin’s history in showing a period of highly positive correlation with Bitcoin (BTC) — at 0.94 against the perfect score of 1 as of March 27 — could also limit its bullish bias if the latter falls due to macroeconomic pressures and ongoing geopolitics.
Mice McGlone, a senior commodity strategist at Bloomberg Intelligence, noted that the price of Bitcoin could fall as low as $30,000 due to its strong correlation with the US stock market. Nonetheless, he maintained that the price of BTC should recover from its downward slide to reach $100,000 in the long term.
DOGE Price Levels to Watch out for
Dogecoin’s latest bounce move now points to a rapid rally towards the $0.15-$0.19 area, a range that encapsulates three levels of psychological resistance: the 20-day exponential moving average (20-day EMA; the green wave), the 50 day EMA (the red wave) and the 0.618 Fib line (near $0.19) of the Fibonacci retracement chart.
A sharp pullback, accompanied by rising volume from such a resistance zone, could see DOGE test the 0.786 Fib line near $0.10 as an interim downside target. Conversely, a decisive move above the range could lead to extended bullish momentum towards $0.24, with an eye on $0.30 and $0.37, which is also the target of the falling wedge.
Conversely, a decisive move above the range could result in extended bullish momentum towards $0.24, targeting $0.30 and $0.37, which is also the falling wedge target.
By Audy Castaneda
