Dogecoin eyes 160% breakout as DOGE paints a bullish technical pattern

MANALI (CoinChapter.com) — Meme crypto Dogecoin’s (DOGE) prices have formed a bullish technical pattern that may increase the meme token prices by more than 1.5 times current levels.

The bullish technical pattern, dubbed the falling wedge, forms when an asset’s price bounces between two downward sloping, converging trendlines. Theoretically, prices breakout above the falling wedge pattern.

The price target for the breakout equals the maximum distance between the wedge’s upper and lower trendlines added to the breakout price. DOGE’s breakout price target is around $0.38, about 160.5% above current price levels.

DOGE bulls successfully defended the token’s prices on Feb 24, 2022, when the meme token reached $0.10. Since then, Dogecoin prices have recovered by more than 46% to reach $0.146 as of Mar 29. Furthermore, the memecoin rebounded off support from the falling wedge’s lower trendline.

Dogecoin Likely To Paint Golden Cross

The recent uptrend helped the Dogecoin token break above a five-month-long downward sloping trendline resistance on Mar 23. DOGE has challenged the descending resistance multiple times since Oct 2021, but the trendline rebuffed every attempt.

Furthermore, DOGE’s current uptrend derives additional bullish tailwinds from a potential golden cross forming between its 20-day Exponential moving average (red wave) and 50-day EMA (yellow wave).

Also Read: SHIB And Dogecoin Make Inroads As US-Based Logistic Company Adopts Coins.

A golden cross is a bullish technical signal that forms when a short-term MA line moves above a relatively long moving average. Traders and analysts usually interpret the pattern as an indicator of a definitive uptrend in the market.

With bulls eager to break out above the falling wedge to validate the pattern and the upcoming golden cross, DOGE would likely flip immediate resistance from its 100-day EMA (purple wave) near $0.151 before targeting resistance near $0.163.

Another key resistance level is near the memecoin’s 200-day EMA (green wave) at $0.174. DOGE would face stiff resistance from bears defending the $0.174 resistance, as the meme crypto has not broken above its 200-day EMA level Nov 17, 2021.

Meanwhile, momentum oscillator MACD continues to be bullish for Dogecoin. The MACD histogram, which plots the difference between the MACD line (difference of 12-day and 26-day EMA) and the MACD signal line (9-day EMA of MACD), is charting expanding positive bars daily charts.

Expanding positive bars indicate the strengthening of bullish momentum for DOGE’s prices.

Downside Risks Increasing

On the other hand, DOGE’s recent uptrend has brought its relative strength index dangerously close to overbought levels, clocking 65.29 on the daily charts. Traders often consider an overbought RSI a prelude to an upcoming trend reversal in bears’ favor. As such, overbought RSI levels often trigger sell-offs.

Also Read: DOGE jumps 12% as crypto ATM chain embraces Dogecoin.

Furthermore, the risk of a trend reversal is high as both Bollinger bands and the relative strength index forecast an overbought signal for DOGE.

In detail, Bollinger bands consist of a simple moving average (middle band) and an upper and lower band. The two bands are usually two standard deviations from the middle band. Therefore, when an asset’s prices break above the upper bands, it denotes an overbought condition.

DOGE prices have been moving above the Bollinger band’s upper trendline since Mar 23. As a result, an overbought RSI might result in a bearish trend reversal.

If DOGE’s upside rally breaks down, the memecoin would likely fall to support near $0.141. Moreover, Dogecoin also has support from its 50-day EMA (yellow wave) near $0.134. Finally, DOGE has support near $0.127, immediately above the Bollinger band’s middle trendline.

At the time of writing, DOGE was trading at $0.1465, up 2.95% on the day.