Dogecoin (DOGE) is showing the prospect of experiencing a strong price rebound after reaching a confluence of technical support on May 12.
25% rebound in the price of DOGE?
DOGE’s price drop of 45% to $0.065 this week, or a 90% decline from its all-time high of $0.76 a year ago, was met with decent buying sentiment. As a result, the token saw a modest price rebound on May 12, rising more than 10% to $0.078.
Interestingly, Dogecoin’s move higher began near a confluence of two support levels: a multi-month downtrend line and a horizontal line that preceded a 335% price rally in the week ending April 19. from last year.
Meanwhile, the downtrend line is part of a broader descending channel pattern. Its multiple retries as support in the last 12 months pushed DOGE price towards the upper trend line of the channel. If the pattern repeats itself, Dogecoin’s bounce will extend towards the upper trend line near $0.1, an increase of almost 25% from the May 12 price.
The bullish setup also picks up signals from Dogecoin’s daily RSI, now near its 30 oversold threshold; a buy signal.
Conversely, a decisive move below the confluence support risks sending DOGE to $0.04, which has served as a strong support level in the February-April 2021 session. That would mean another price decline of 40 % before the next potential bounce.
Elon Musk against the US Federal Reserve
Dogecoin’s latest market sell-off coincides with a similar sentiment across crypto and traditional markets alike, led by the Federal Reserve’s decision to aggressively tighten monetary policy to curb rising inflation.
Dogecoin, like its bigger rivals Bitcoin (BTC) and Ethereum (ETH), has also been hit by the panic surrounding the de-pegging of two popular stablecoins: TerraUSD (UST) and Tether (USDT).
2/2…mainstream adoption of #cryptos not just to trade, but also to conduct everyday transactions for goods & services. The upshot: keep a close eye on the biggest stablecoin, #tether. $USDT fell to $0.95 overnight & is back to $0.99 now.$BTC $ETH
— DataTrek Research (@DataTrekMB) May 12, 2022
As DOGE remains above its technical support levels, its next potential bull case is none other than Tesla CEO Elon Musk.
The billionaire investor, who has become one of Dogecoin’s most celebrated advocates, recently bought Twitter for $44 billion. Before the acquisition, he had suggested that Twitter’s board of directors start accepting DOGE as payment for its first Twitter Blue subscription service.
#ElonMusk bought twitter
I think #dogecoin will benefit from it
— Yuriy_Bishko (@YuriyBishko) April 26, 2022
Twitter has not disclosed any plans to use DOGE for payments. But the possibility of it happening could put a price floor on the token in the coming weeks.
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