Dogecoin constricts inside bullish reversal pattern, DOGE could return to $0.19 soon
|- Dogecoin price returns inside falling wedge pattern.
- Early signs of another bullish breakout attempt appear.
- Downside risks remain substantial – but follow remains muted.
Dogecoin price continues its slow slide south, even dropping below the falling wedge pattern before returning inside of it. This means that the structure of that wedge pattern remains in play – and is very, very close to executing.
Dogecoin price nears the apex of a falling wedge pattern, imminent collapse, or rally soon
Dogecoin price has been in a state of flux and whipsaws for the majority of January. A price swing of over 50% higher followed by a 44% drop and then a subsequent 30% rally have generated substantial anxiety for bulls and bears.
The falling wedge pattern is the crucial factor for Dogecoin price. The falling wedge is the most potent standard geometric bullish reversal pattern. It is the definition of excess and often occurs at the extreme lows of an already oversold market.
According to Bulkowksi, breakouts above the pattern that then pullback are extremely rare and almost always result in a continuation of the downtrend. However, after Dogecoin price did breakout above the falling wedge and then below it, sellers were unable or unwilling to commit with more follow-through selling.
The ultimate result of these wild price swings is a return to equilibrium inside the falling wedge. DOGE has moved lower, but structurally it remains the same. The timeframe for Dogecoin price to decide the direction of the next breakout is quickly approaching – that apex of the wedge occurs on February 2.
DOGE/USDT Daily Ichimoku Kinko Hyo Chart
A breakout above the falling wedge is statistically the most likely move – but if bulls want to prevent another whipsaw event, then DOGE needs to move at least 20 to 25% above the trendline, near the $0.19 value area.
Downside risks are substantial. Dogecoin is always at risk of a swift sell-off anytime below the $0.16 price level. The Volume Profile remains extremely thin between $0.16 and $0.09, so tight stops are necessary for the current value area.
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