Dogecoin (DOGE) Price Faces Possibility of Correction

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The Dogecoin (DOGE) price is trading inside a short-term bearish pattern from which a breakdown is likely.

The Dogecoin price has increased alongside an ascending support line since the beginning of the year. The upward movement led to the highest price of the year at $0.099 on Feb. 5. However, the price failed to break out above the $0.10 resistance area, creating a long upper wick. This is considered a sign of selling pressure. Now, the DOGE price risks breaking down from the support line.

Despite the drop, the daily RSI does not show signs of weakness. On the contrary, it is still above 50 and has not generated any bearish divergence.

If DOGE breaks out above $0.10, the next resistance would be at $0.108. On the other hand, a breakdown from the ascending support line could lead to a retest of the 0.618 Fib retracement support level at $0.079.

DOGE/USDT Daily Chart. Source: TradingView

There is no clear Dogecoin news that could affect the price. Even though Twitter’s CEO Elon Musk has announced a plan to introduce payments in the platform, there is no specific news about whether the internet meme coin will be used in such payments.

Dogecoin Price Trades in Bearish Pattern

The technical analysis from the short-term six-hour chart supports the bearish divergence, indicating that a correction is expected. There are two main reasons for this. 

Firstly, the price is trading inside an ascending parallel channel. Such channels are considered bearish patterns. The fact that it is now in the lower portion of the channel supports the possibility of a drop. 

Secondly, the wave count suggests that the Dogecoin price completed a five-wave upward movement (black). In it, wave five took the shape of an ending diagonal. The sub-wave count is given in red. A breakdown from the channel would confirm this bearish count. This could occur in the next 24 hours.

Therefore, the most likely Dogecoin price forecast is a breakdown and drop toward $0.078. This would also take the price to the region of wave four, which is common in corrections. 

On the other hand, a breakout from the channel would invalidate this bearish hypothesis and likely send the DOGE price to $0.108. 

Dogecoin (DOGE) Wave Count
DOGE/USDT Six-Hour Chart. Source: TradingView

To conclude, the most likely Dogecoin price forecast suggests that the DOGE price will break down from the current pattern, falling to $0.078. A breakout from the channel would invalidate this, stating that the trend is bullish instead. In that case, an increase to $0.108 would be likely.

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