Dogecoin (DOGE), one of the most popular meme-based cryptocurrencies, has recently lost a crucial support level within an Ascending Triangle pattern, leading analysts to predict a potential extended drawdown. According to renowned crypto analyst Ali Martinez, this technical breakdown could have significant implications for the future price action of Dogecoin.
Understanding the Ascending Triangle Pattern The Ascending Triangle is a well-known technical analysis (TA) pattern that traders often use to predict future price movements. This pattern forms when an asset’s price consolidates within a triangular region, characterized by two trendlines:
- The upper trendline is a horizontal resistance level, connecting the successive highs that struggle to break out.
- The lower trendline has a positive slope, connecting successive higher lows and indicating a gradual increase in buying pressure.
Typically, an Ascending Triangle is considered a bullish formation, as it suggests that buyers are gaining control over sellers, gradually pushing prices higher. However, when the price fails to break through the resistance and instead falls below the ascending support trendline, it signals weakness, often leading to a price decline.
Dogecoin’s Recent Breakdown Martinez’s analysis highlights that Dogecoin has recently broken below the lower trendline of its Ascending Triangle pattern. This breakdown means that the previously strong buying pressure supporting the asset has weakened, and bears have taken control of the price action. The failure to maintain this support could now lead to a prolonged drawdown, potentially pushing DOGE into lower price territories.
Potential Impact on Dogecoin’s Price When an asset loses the support of an Ascending Triangle, a significant downward move usually follows. In Dogecoin’s case, the breakdown could trigger a retest of previous support levels, with bearish targets potentially aligning with historically significant price zones.
Some key levels to watch include:
- $0.12 – $0.14: This range has previously acted as a strong demand zone, meaning a retest could result in temporary price stabilization.
- $0.10: A critical psychological level that could attract buying interest from long-term holders.
- Below $0.10: If selling pressure intensifies, Dogecoin could enter a more extended bearish phase, revisiting even lower support levels.
On-Chain Metrics Indicate Caution Beyond technical analysis, on-chain metrics can provide additional insight into Dogecoin’s potential future price action. Recent data suggests the following:
- Declining Whale Activity: Large holders (whales) have shown signs of distribution, which can contribute to downward price pressure.
- Decreasing Network Activity: The number of active addresses and transaction volumes has slowed down, indicating reduced market participation.
- Futures Market Liquidations: A rising number of long liquidations in Dogecoin futures suggests leveraged traders are being forced out of their positions, exacerbating selling pressure.
What Could Reverse the Bearish Trend? While the breakdown from the Ascending Triangle suggests further downside, there are factors that could help Dogecoin regain bullish momentum:
- Renewed Market Optimism: A broader cryptocurrency market recovery, driven by Bitcoin or Ethereum rallies, could provide upward momentum for DOGE.
- Fundamental Developments: Positive news such as adoption by major companies, endorsements from influential figures, or network upgrades could renew investor confidence.
- Strong Buy Support at Key Levels: If Dogecoin finds strong buyer demand at key support levels, a rebound could be possible, negating the bearish breakdown.
Dogecoin’s recent loss of the Ascending Triangle support has raised concerns about an extended drawdown. Technical indicators and on-chain metrics suggest that the meme coin could experience further downside unless strong buying pressure emerges at critical support levels. As always, investors should exercise caution, conduct thorough research, and monitor key price levels before making any trading decisions.
With the cryptocurrency market remaining highly volatile, only time will tell whether Dogecoin can recover from this setback or if it will continue to trend downward in the coming weeks.
