dogecoin (DOZ) cut some losses against Bitcoin (BTC) on March 10, a day after the DOGE/BTC pair fell to its lowest level since October 2022. Could the price of DOGE see a sustained bounce ahead?
In the daily chart, DOGE/BTC pair reached 331 sat, up 4.75% from the previous day’s low of 316 sat. The bounce occurred around a multi-month downtrend line that has capped the pair’s downward moves since November 2022.
Price of DOGE vs. BTC
Interestingly, the DOGE/BTC downtrend line appears to be part of a prevailing falling wedge pattern. Traditional chart analysts consider a falling wedge a bullish reversal setup, especially because of the pattern 62% success rate to achieve its upside price targets.
In the case of Dogecoin, the price swings around the apex of the falling wedge, where the upper and lower trend lines meet. DOGE’s recent bounce from the lower trendline raises the possibility of testing the upper trendline for a breakout as illustrated in the chart below.
The bullish setup further draws support from the DOGE/BTC daily relative strength index (RSI) with a reading around 28. Technically, an RSI below 30 means the pair is oversold, which could cause its price to consolidate sideways or bounce.
In the event of a breakout, DOGE/BTC could rise to 500 sat by April, which is 50% more than current price levels. The upside target is measured after adding the maximum distance between the upper and lower trend lines of the falling wedge to the breakout point.
However, a decisive drop below the lower trendline of the falling wedge risks invalidating the entire upside setup. Instead, DOGE could fall to 280 sats, a historical support level down, about 13% from current price levels
Such a scenario is possible given Dogecoin’s stay with a failed falling wedge pattern in March 2022, when the DOGE/USD pair broke below the lower trendline — 50% losses followed.
Which way for DOGE price?
Dogecoin may still fall in USD, but largely due to the rally macroeconomic uncertainty.
In recent years, the price of Dogecoin has risen mainly after events provoked by news and The support of Elon Muskincluding hopes of a DOGE payment option on Twitter.
Connected: Why is the crypto market falling today?
However, Musk said on March 3 that he would shift his focus from cryptocurrencies to artificial intelligence. The billionaire entrepreneur did not name Dogecoin specifically, but many interpreted that Musk may be distancing himself from the industry moving forward.
“I used to be in crypto, but now I’m interested in AI”
— Elon Musk (@elonmusk) March 3, 2023
The price of Dogecoin fell more than 20% to $0.06 after Musk’s tweet. Also, from a technical perspective, the price is well positioned to drop another 10% in the coming weeks on a retest of an old support level around $0.055-0.042.
Conversely, a bounce from the support range could see the DOGE price rally test the upper triangle trendline at around $0.076, resulting in gains of approximately 15% from current price levels.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk and readers should conduct their own research when making a decision.
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