Dogecoin: Analyst Predicts Potential Rally as Doge Forms Descending Triangle
Dogecoin, the popular meme coin, is once again making waves in the crypto community. A recent tweet by renowned analyst Ali Martinez has caught the attention of many, hinting at the potential for a significant rally for DOGE.
In the tweet that quickly gained traction, Martinez highlighted an interesting pattern on Dogecoin's monthly chart. According to the analyst, the last time a descending triangle formed on the weekly chart, DOGE experienced a staggering 23,200% surge. Now, as history could repeat itself, Martinez is keeping a key resistance level in focus for confirmation. As stated in the tweet:
"Dogecoin: The last time a descending triangle formed on the weekly chart, DOGE surged 23,200%. I'm looking for a sustained monthly close above $0.80 for confirmation."
The journey of Dogecoin has been quite a rollercoaster ride. Back in January 2018, DOGE reached an all-time high of nearly $0.02, but then entered a prolonged consolidation phase, forming the descending triangle over the next three years.
However, with the onset of the new bull market catalyzed by the momentum of Bitcoin, DOGE managed to break out of its extensive consolidation pattern and reached a high of $0.7588 on May 8th.
Dogecoin Price Analysis - 1D Chart
Upon closer examination of the 1-day chart, it becomes clear that Dogecoin is now at a critical turning point. Will the price be able to reverse its trend, or will it succumb to a continuation of the downtrend after a brief pause in upward activity?
In the case of Dogecoin, the ascending triangle could signal a trend reversal. Since reaching a local high of $0.1591 on November 1st, 2022, following the hype surrounding Elon Musk's takeover of Twitter, DOGE has been in a clear downtrend. From November to mid-June, DOGE recorded lower highs and lower lows on the 1-day chart.
However, since hitting a 13-month low of $0.0536 on June 10th, DOGE has shown signs of an uptrend and formed a so-called ascending triangle. This particular pattern falls into the category of consolidation formations and usually indicates a continuation of the previous trend after a brief consolidation phase. Under exceptional circumstances like this, an ascending triangle can signal a trend reversal.
As the Dogecoin community eagerly awaits the potential effects of this ascending triangle, it is important to keep an eye on the upcoming resistance levels. Dogecoin needs to confirm the pattern by continuing its uptrend and breaking the resistance at $0.075. This level has proven to be a formidable barrier in the past, as three previous attempts to break it have been unsuccessful.
In the case of a successful breakout, the first obstacle lies at $0.0783, marked by the 23.6% Fibonacci retracement level. If DOGE surpasses this resistance, a rise to $0.0936 becomes a realistic possibility, where the 38.2% Fibonacci retracement level is located.
Further bullish targets are $0.1036 (50% Fibonacci retracement level), $0.1186 (61.8% Fibonacci retracement level), and $0.1363 (78.6% Fibonacci retracement level). Ultimately, reaching the previous high of $0.1591 from November 2022 would be the most ambitious target, although the potential for increased selling pressure at that point is still being considered.
Currently, a drop below $0.07 would invalidate the ascending triangle theory. Should this occur, the first bearish target could be at $0.0636, followed by the yearly low of $0.0536.
Selected image from iStock, Chart from TradingView.com
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