An analyst has explained how Dogecoin has been forming a Falling Wedge pattern recently, breaking which may kickstart a new bull rally.
Dogecoin Has Been Moving Inside A Falling Wedge Recently
In a newpost on X, analyst Ali Martinez has discussed a pattern that has recently been forming in the 1-day price of Dogecoin. The pattern in question is the “Falling Wedge” from technical analysis (TA), which is a type of Wedge.
A Wedge pattern appears when the price of the asset consolidates between two converging trendlines (that is, the lines have different slopes and are angled inwards). Depending on where this consolidation is headed, the pattern is termed as Falling or Rising.
In a Falling Wedge, the upper line of the pattern connects lower highs in the price, while the bottom one connects lower lows. Similarly, a Rising Wedge has the upper line joining together higher highs and the lower one with higher lows. Just like other TA consolidation patterns, the upper line may continue to act as a source of resistance in the near future, while the lower one may provide support.
Also, a break out of either of these trendlines can suggest a continuation of pattern in that direction. Wedges specifically are considered to be formations that lead to a reversal, so a break in the direction opposite to that of the Wedge may be considered to be more likely.
Dogecoin has recently been showing a Wedge-like consolidation towards the downside in recent months, so the coin may be forming a Falling Wedge pattern. Below is the chart shared by Ali that showcases this formation.
As is visible in the graph, the Dogecoin price has recently made an apparent retest of the bottom line of this Falling Wedge pattern and has found support at it. Thus, it’s possible that DOGE may now see a surge towards the upper trendline.
Before the coin retests the upper line, though, there is perhaps another important level it has to surpass first: the 0.236 Fibonacci Retracement level. Fibonacci Retracement levels are based on ratios that are found in the famousFibonacci series.
These levels correspond to the percentage of drawdown as measured between two fixed levels. In the current case, Ali has taken the top of the Falling Wedge as the start of these levels (that is, the 100% or 1 mark).
The analyst notes that if Dogecoin can manage a sustained close above the $0.10 level (that is, above the 0.236 Fibonacci Retracement), it may be able to start a rally toward the $0.15 level.
From the current price of the memecoin, such a potential run would mean an increase of around 53%. It now remains to be seen how DOGE develops in the coming days and whether it would be able to follow any similar trajectory or not.
DOGE Price
Dogecoin had fallen under the $0.090 mark a couple of days back, but the asset appears to have rebounded as it has now recovered to $0.098.
Featured image from Dall-E, charts from TradingView.com