The brutal correction in the Dogecoin market (DOGE), which saw prices drop by nearly 85% between May 2021 – February 2022, seems to have stopped this month.
In two weeks, DOGE/USD gains 30%
DOGE saw strong dip-buying after its price fell to $0.10 two weeks ago. This resulted in a 30% rebound to $0.14 on March 27. The upside retracement of the coin occurred at a support level which constitutes a “falling-wedge” setup. This signals a bullish reversal for the coming weeks.
A falling wedge pattern is when the price trend lower and fluctuates between two converging downward-sloping trendlines. The ideal scenario is for the price to break out of the descending range and rise as far as the distance between the upper and lower trendlines.
Weekly DOGE/USD price chart with ‘falling wedge’ pattern. Source: TradingView
DOGE’s recovery from the wedge’s lower trendsline two weeks back opens up DOGE’s potential to continue its upside move toward the upper trendline, near $0.18. Dogecoin’s price surge to $0.37 is further evidenced by breaking above the upper trendline, which is more than 150% higher than today’s.
Tom Bulkowski, a veteran investor, sees the falling wedge as a “poor performing” indicator when it comes to forecasting bullish chart patterns. He notes that their “breakeven failure rate is high and their average price is low”. A study of 800 trades shows that the probability of a falling wedge breakout reaching its bullish target is close to 62%.
Dogecoin’s history of showing a period with a high correlation with Bitcoin (BTC), at 0.94, as compared to the perfect score (1 as of March 27) could limit its bullish bias in the event that the latter falls due to ongoing geopolitical and macroeconomic pressures.
The correlation coefficient between DOGE/USD & BTC/USD. Source: TradingView
Related: Bitcoin sellers maintain control over BTC’s price action amid $45K fakeout warning
Mice McGlone is a senior commodity strategist at Bloomberg Intelligence. He noted that Bitcoin’s strong correlation to the U.S. stock markets could cause it to drop to $30,000 or more. He maintained, however that Bitcoin’s price should rebound from the bearish slump and reach $100,000 long-term.
Watch out for the DOGE price levels
Dogecoin’s recent rebound move now targets a quick run up towards $0.15-0.19, a range that encompasses three psychological resistance levels — the 20-day exponential moving mean (EMA; green wave), 50-day EMA(red wave) and the 0.618 Fib (near $0.19 of the Fibonacci retracement chart). All these are shown in the chart below.
Daily price chart for DOGE/USD Source: TradingView
DOGE could test the 0.786 Fibline near $0.10 by a strong pullback and accompanied with a rise of volume from the resistance area. A decisive move above this range could lead to an extended upside momentum towards $0.24 with an eye on $0.30 or $0.37 (also known as the falling wedge target).
A decisive move above this range could lead to an extended upside momentum towards $0.24 with an eye on $0.30 or $0.37 (also known as the falling wedge target).
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