Dogecoin price action is on a high correction path on a weekly time frame, with the cryptocurrency currently down around 13% over the past seven days. Although the broader crypto market the feeling seems positive, the king of meme coins has not yet benefited and has exceeded the $0.4 mark.
Technical analysis of the DOGE price chart shows that the cryptocurrency is fluctuating in an ascending triangle, which could be dangerous for the future price trajectory.
DOGE Ascending Triangle Pattern: Opportunity or Risk?
Andrew Griffiths, crypto analyst at social media platform noted that Dogecoin is currently fluctuating up and down in an ascending triangular pattern. This pattern has been in play since mid-December, and Dogecoin has bounced off the upper and lower trendlines of this pattern several times.
In his analysis, Griffiths noted that the ascending triangle currently shaping DOGE’s price movement is both promising and dangerous. Historically, this pattern is generally known to eventually lead to a breakout to higher levels, but it also presents the likelihood of sharp declines if price breaks key support zones within the pattern.
Naturally, the an upward trajectory should be the caseBut Dogecoin’s persistent fluctuation within the trend suggests that the meme coin may initially be trending down, even if it were to ultimately experience another rally. Griffiths mentioned that optimism after the election of Donald Trump has created positive sentiment in the market, which could support Dogecoin’s bullish momentum. However, he stressed that this optimism may not protect the same coin from potential volatility related to its persistent price action in this setup.
Can Dogecoin bounce back from here?
At the time of writing, DOGE is trading at $0.36, reflecting a 2.6% gain over the past 24 hours after rebounding from $0.34. However, this daily rally has done little to offset its broader performance, as Dogecoin remains down 13.2% over the past week. Analysis of recent price movements reveals that the meme coin has been facing some releases on a descending trendline over the past seven days.
As it stands, DOGE is now looking to break above this descending trendline again. Another rejection here will prolong the downward price movement. The view in this case is that Dogecoin may have already passed this cycle, which would lead to another prolonged correction towards the $0.22 mark.
The other result is that Dogecoin breaks out of the trendline and continues an upward trend from there. This is the most bullish option. According to the technical analysis of crypto analyst Kevin (@Kev_Capital_TA), this is the more likely scenario for Dogecoin. He noted that despite the downtrend, DOGE is still trading above the golden macro pocket. However, he noted that this scenario would mainly depend on Bitcoin making the first upward move.
Featured image from Unsplash, chart from Tradingview.com