Key Takeaways
- •Dogecoin's (DOGE) chart patterns, specifically an Adam and Eve formation combined with Fibonacci confluence, suggest a potential 25% price increase.
- •Significant short liquidation zones located above $0.216 could act as a catalyst for a rapid price rally.
Dogecoin (DOGE) experienced a 2.5% jump, reaching $0.20, as market attention was drawn to Elon Musk's recent post on X, which featured the memecoin's mascot, Shiba Inu. Following this post, the DOGE price surged by 29%.
This movement extended DOGE's significant rebound from its recent low of $0.13, a level not seen since April. The cryptocurrency has achieved a 55% recovery within a two-week period.
Musk's tweets have historically been instrumental in DOGE's dramatic price increases, including its remarkable rally in 2021 from a few cents to nearly $0.73.
With improving market sentiment and multiple technical indicators signaling bullish trends, the leading memecoin appears well-positioned to continue its recovery trend in the latter half of October.
DOGE's Technical Indicators Suggest Potential 25% Gains
Dogecoin is currently forming an Adam and Eve double-bottom pattern. This is recognized as a bullish reversal setup, characterized by a sharp, V-shaped decline (Adam) followed by a more rounded recovery phase (Eve). The presence of this pattern indicates a potential decrease in selling pressure and a growing dominance of buyers in the market.
The neckline for this pattern is situated around the $0.216 mark. A confirmed breach above this resistance level could potentially initiate a price movement towards $0.260, representing an approximate 25% increase from current trading levels.
This projected target aligns with the measured move calculation derived from the pattern and converges with a significant technical confluence zone. Furthermore, it corresponds with the 0.382 Fibonacci retracement level on DOGE's weekly price chart.
The prospects for a price rebound are further strengthened by DOGE's recovery from a support confluence. This confluence includes an ascending trendline and a 0.236 Fibonacci line, underscoring the buying interest at lower price levels. The immediate upside target remains at $0.26.
Potential Short Squeeze Could Drive DOGE Towards $0.26 Target
Analysis of futures data reveals a higher concentration of short liquidations occurring within the price range of $0.215 to $0.27. In contrast, long liquidation levels are relatively stable below $0.18.
This imbalance in liquidation levels suggests a reduced risk of significant downside movement, as fewer leveraged long positions are poised to trigger substantial sell-offs. Conversely, the upside faces a dense liquidity wall of short positions that are vulnerable to liquidation.
Consequently, a breakout above the $0.216 neckline could trigger a cascade of short liquidations. This event could accelerate Dogecoin's price ascent towards the $0.26 target, as bearish traders are compelled to buy back into the market to cover their positions.