Dogecoin price risks 40% correction despite Elon Musk-Twitter euphoria

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Dogecoin price risks 40% correction despite Elon Musk-Twitter euphoria
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The price of Dogecoin (DOGE) has risen over the past 24 hours after its most prominent backer, Elon Musk, bought Twitter for $44 billion. In its best-case scenario, Dogecoin climbed to $0.17 on April 25, although it was still down 77% from its all-time high in May 2021.

Twitter’s native currency: Dogecoin?

On the 24-hour adjusted time frame, the price of DOGE rose by nearly 25% to $0.15, confirming that traders believe that Musk’s acquisition of Twitter is a bullish event for Dogecoin.

Why: Musk’s long-standing support for DOGE, including his recent suggestion to Twitter’s board that they should start accepting Twitter Blue’s memecoin, their first subscription service.

The comments come a year after Twitter revealed that it plans to double revenue to $7.5 billion by the end of 2023, raising hopes that Musk, 100% owned by the company, will boost its future sales with an additional DOGE payment option .

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In January, Musk’s flagship company, Tesla Motors, began accepting Dogecoin, and only as part of its merchandise.

Related: What Elon Musk’s Investment Means for Twitter’s Crypto Plans

DOGE price correction risk

Still, Dogecoin faces a medium-term sell-off risk after posting impressive gains over the past 24 hours.

The price of DOGE started lower after retesting a multi-month downward sloping trendline as resistance.

Interestingly, this line forms a descending channel pattern, which increases the likelihood that DOGE will extend its pullback by a further 35%-40% by the end of the second quarter, as shown in the chart below.

DOGE/USD daily price chart with “Descending Channel” setup. Source: TradingView

Selling risks to the channel’s lower trendline also remain elevated as the 200-day exponential moving average (EMA) waves near $0.16, limiting Dogecoin’s upside attempts since November 2021.

DOGE/USD daily price chart with Fib S/R levels. Source: TradingView

Conversely, if the strong upside continues above the channel’s upper trendline and 200-day EMA, DOGE’s price will test $0.20 in the second quarter. This key level also coincides with the 0.382 Fibonacci retracement chart from the $0.35 swing high to the $0.10 swing low.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk and you should do your own research when making a decision.



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