Briefly following Tesla CEO Elon Musk’s Twitter buyout bid last week, the price of Dogecoin (DOGE) briefly surged as DOGE closed the week more than 8%.
DOGE price dropped to $0.142 on April 17th, three days after peaking at $0.149 locally. The Dogecoin correction, although modest, increased the potential to trigger a classic bearish reversal pattern with an 85% success rate of reaching its downside target.
DOGE’s price point of view is $0.10 . is less than
Dubbed the head and shoulders (H&S), the pattern appears when price makes three peaks in a row, with the middle one, called the “head”, in between the other two, which are roughly equal height. consists of, and thus they are called, left and right “shoulders.”
These three peaks form above a common support level called the “neckline”. As the theory goes, price usually breaks below the neckline after the formation of the third peak, or right shoulder, and drops to the H&S maximum high, that is, the distance between the top of the head and the neckline.
DOGE appears to have been building a similar structure since at least March 24. The cryptocurrency is now falling to the neckline after forming its right shoulder, followed by a full bearish breakout, as shown in the chart below.
As a result, Dogecoin appears more likely to correct towards the H&S neckline near $0.132, which is down about 7.5% from today’s price. The level coincides with DOGE’s 50-day simple moving average (50-day SMA; blue wave), thus providing additional support.
A decisive breakout move below the support confluence could risk triggering an H&S setup, with a downside target below $1, which is nearly 30% below today’s price.
Interestingly, the target appears to be close to the lower trendline of the descending channel pattern, which has covered Dogecoin price movements since December 2021.
“musk effect”
Musk remains an influential catalyst behind Dogecoin’s interim price trends.
News of him buying a 9.2% stake in Twitter on April 4 helped propel DOGE’s price to $0.174 a day later by more than 20%, its best level in nearly three months.
Traders closed out interim gains after a correction, only for the price of DOGE to rebound after Musk showed his intent to acquire Twitter entirely for $43 billion.
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Enthusiasts believe that the “Musk effect” and his growing influence on Twitter could boost Dogecoin adoption and price, with Robinhood CEO Vladimir Tenev further bolstered his sentiment, who said earlier this week Said that DOGE could become the “currency of the Internet”.
#dogecoin + Elon Musk + Twitter + Popularity = $10 Future Value Let’s Go $ doge #DogecoinToTheMoon
— Dogecoin and Bitcoin HODL (@HodlDogecoin) April 15, 2022
Musk has backed the idea so far, suggesting that the Twitter board introduce a DOGE payment option for the social media’s Twitter Blue monthly subscription service.
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