Dogecoin price trapped in cup and handle pattern, may drop below $0.2
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In the past month, Dogecoin's price has fallen over 21% and is currently consolidating around $0.3. Recently, a cryptocurrency analyst discovered a new 'cup and handle pattern' in the Dogecoin chart, which may indicate that Dogecoin is facing more downward price pressure, potentially dropping below $0.2.
Chart pattern indicates a significant drop in Dogecoin price
An analyst on TradingView named 'Cryptechcapital' shared a chart showing the Elliott Wave analysis of Dogecoin's long-term price trend. The analyst pointed out that a textbook 'cup and handle pattern' has appeared in the Dogecoin chart, a technical indicator that typically signifies a consolidation period before a breakout. Although the cup and handle pattern is usually considered a bullish signal in an uptrend, its appearance in the Dogecoin chart suggests that the price may experience a significant correction, potentially reaching new lows.
The analyst's chart reveals a typical 5-wave structure, with Dogecoin currently in the 4th wave, or corrective wave. During this phase, the price retraces and enters a prolonged period of sideways consolidation. The 'handle' of the cup and handle pattern corresponds with the 4th wave in Dogecoin's 5-wave structure.
Possible downside risks and market pressures
In the short term, TradingVolume analysts predict that after completing the 4th wave, Dogecoin's price may see a significant decline. If the cup and handle pattern remains intact, Dogecoin may face downward pressure next week. The analyst also noted that the broader cryptocurrency market could experience similar bearish pressure, especially in the context of heightened market volatility and declining Bitcoin prices.
While the predicted drop is not yet clear, it is common for the 4th wave correction to retrace a significant portion of the 3rd wave increase. Based on this pattern, if Dogecoin experiences a price decline during the 4th wave, it could fall below the $0.2 support level.
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