Dogecoin (DOGE) has continued its rally four weeks after closing near $0.10 and is now promising a further upward move in Q2/2022.
Dogecoin price nears two-month high
The price of DOGE was up about 6.5% week-on-date to $0.15 per coin. The coin’s recent gains came as Elon Musk revealed his $3 billion stake in Twitter on Monday, reiterating his influence on its market.
Musk has been a big supporter of the Dogecoin community, including his decision to accept DOGE payments in the online merchandise store of his company Tesla.
As Cointelegraph reported, Musk’s investment could help advance Twitter’s crypto initiatives and could even see DOGE integration on the social media platform.
Hence, @ Jack Twitter owns 2%, @Elon Musk Owns 9%!@ Jack loves btc.@Elon Musk Love $DOGE,
— Ran Lesser (@cryptomanran) 4 April 2022
DOGE’s falling wedge breakout is underway
Musk’s Twitter investment also helped Dogecoin break out of a falling wedge pattern.
By extension, falling wedges are considered a bullish reversal setup and appear when price consolidates lower inside a range defined by two converging, descending trendlines, while trailing lower highs and lows.
In an ideal scenario, falling wedges resolve when price breaks decisively above their upper trendline. As this happens, traders usually move towards a level that is at a length equal to the maximum distance between the upper and lower trendlines of the wedge.
As DOGE price goes through a similar pattern, the chances of it continuing the uptrend have increased after breaking above the trendline on April 4. Therefore, the coin is now moving towards $0.37, which is approximately 150% higher than today’s price, as shown in this. chart below.
DOGE Price Drop Risk
Nonetheless, the Bullish setup comes with downside risks. Notably, Dogecoin’s breakout coincided with weak volume moving above the upper trendline of a falling wedge, indicating that traders lack confidence in the rally.
RELATED: What Elon Musk’s Investment Could Mean for Twitter’s Crypto Plans
DOGE also traded below two important support levels: the 20-week exponential moving average (20-week EMA; green wave) near $0.15 and the 50-week EMA (red wave) near $0.17.
A pullback from the said price range could see Dogecoin return to the upper trendline of the descending wedge to test it as a new support level. On the other hand, an extended decline runs the risk of invalidating the entire bullish reversal setup.
Holding the upper trendline of the wedge as support and breaking the 20- and 50-week EMAs with strong volume will keep DOGE’s $0.37-target intact.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.
