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An analyst has explained how Dogecoin might have to hold strong above this level, if the memecoin has to avoid a 30% price drop.
Dogecoin Is Currently Trading Inside A Symmetrical Triangle
In a new post on X, analyst Ali Martinez has shared a chart that shows where Dogecoin currently stands from a technical analysis (TA) perspective. Below is the graph in question, showing the trend in the 1-day price of the memecoin.
From the chart, it’s visible that the Dogecoin price has possibly been trading inside a triangular channel during the last few months. The channel hasn’t appeared to be just any triangle-shaped one, either, but a special type called the Symmetrical Triangle.
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A Symmetrical Triangle forms whenever an asset observes consolidation between two trendlines converging at a roughly equal and opposite slope. The upper line of the pattern tracks lower highs in the price, and the lower one higher lows.
As the asset moves inside this channel, its range becomes narrower with time, until it shrinks down to a point at the apex. Generally, volatile moves are more likely to occur when consolidation tightens, so a breakout of the pattern becomes increasingly probable as the price approaches the tip of the triangle
Symmetrical Triangle breakouts can signal a continuation of the trend in the direction of the break. This means that a rise above the pattern can be a bullish sign, while a drop below it may be a bearish one.
As displayed in the chart, the 1-day price of Dogecoin has recently been nearing the end of the triangle, a potential sign that a breakout could be imminent. Currently, the memecoin is retesting the lower line, so it will be interesting to see whether the level holds or if this is where a break would finally happen.
Unlike the Ascending and Descending Triangles, two other popular types of triangular channels in TA, breakouts are usually considered to be equally probable in either direction for a Symmetrical Triangle. The reason is simple: consolidation occurs in an exactly sideways manner in this pattern. In contrast, the Ascending and Descending types slope upward and downward, respectively, which can bias the breakout direction.
Thus, even if Dogecoin is retesting the lower level right now, a rebound and then breakout from the upper line may also still be quite possible. That said, in the event that a bearish breakout does take place, things can be especially troubling for DOGE, as there is another level of importance just nearby.
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The level in question, situated around $0.168, corresponds to the 0.786 Fibonacci Retracement level. Fibonacci Retracement levels are lines defined using ratios found in the famous Fibonacci series. “Dogecoin $DOGE must hold above $0.168 to avoid a 30% price drop!” warns the analyst.
DOGE Price
At the time of writing, Dogecoin is trading around $0.177, down over 4% in the last week.
Featured image from Dall-E, charts from TradingView.com