Despite the current cryptocurrency bear market, Dogecoin (DOGE) appears poised to extend its rally.
DOGE has a 79% chance of extending the rally
Since May 11, the price of DOGE appears to have been charting a Bump and Run Reversal (BARR) bottom, a technical pattern that suggests a widening trend reversal in a bear market. It consists of three successful phases: Import, Collision and Run.
The introduction phase saw prices consolidate within a narrow sideways range, indicating a mid-term bias conflict among investors.
This is followed by a bump phase, in which the price drops and recovers sharply, leading to a price breakout, defined by the run phase.
Dogecoin appears to be in a bumpy phase while eyeing a breakout of the descending trendline resistance at the bottom of BARR. Suppose DOGE breaches the aforementioned price ceiling. Then, as a rule of technical analysis, it will look at the raw levels of BARR.
This pushed the price of DOGE to $0.0941, up more than 20% from its June 27 price. Notably, the upside target is also in line with the coin’s 50-week exponential moving average (50-week EMA; blue line in the chart below).
According to a report by veteran investor Thomas Bulkowski, the BARR bottom has reached its 79% profit target. Interestingly, the breakout phase of the pattern typically produces an average gain of 55%, which means that DOGE could still reach $0.123.
DOGE price bottoms out?
Dogecoin’s rise to $0.0941 may not be able to escape its bearish trend due to a range of technical and fundamental factors.
From a technical standpoint, DOGE’s price risk is in a bull trap with an uptrend (up nearly 60% over the past 9 days). Notably, the coin’s downside bias is due to a rising wedge pattern on its lower timeframe chart.
In detail, DOGE is in an uptrend within a range defined by two ascending and contracting trend lines, thus forming a rising wedge.
Typically, this technical setup results in a bearish reversal, confirmed when the price breaks below the trendline of the wedge.
In fact, the price could fall as much as the maximum distance between the upper and lower trendlines of the wedge.
A potential breakout point for the DOGE rising wedge is in the $0.07-$0.08 range. Therefore, if the wedge breakdown goes as expected, the coin could drop to the $0.05-0.06 region, a 15%-25% drop from current price levels.
Related: The 2022 Bear Market Is The Worst On Record – Glassnode
Fundamentals including Fed rate hikes and a $9 trillion balance sheet shrinking support the short- to medium-term technical downside outlook.
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