Dogecoin's price is consolidating around $0.30 after dropping over 21% in the past month. A cryptocurrency analyst has identified a new Cup and Handle pattern, suggesting that the leading meme coin is likely to endure more pain, with a possibility of dropping below $0.20.

Sample chart triggering the price collapse of Dogecoin

A TradingView analyst named 'Cryptechcapital' has shared a chart showcasing Elliott Wave analysis of Dogecoin's price fluctuations on a long-term weekly timeframe. While the analyst provided a detailed report on Dogecoin's current Elliott Wave structure, he identified the formation of a textbook Cup and Handle pattern.

The Cup and Handle pattern is a technical indicator signaling the consolidation phase before a breakout. While often considered a bullish signal extending the uptrend, the cryptocurrency analyst has noted that its appearance on Dogecoin's chart indicates a significant price correction down to new lows.

The price chart of Dogecoin by the analyst outlines the 5-wave impulse structure from 1 to 5. Dogecoin is currently in Wave 4, a corrective wave, where the price retraces and moves sideways for an extended period. The handle of the Cup and Handle pattern corresponds to Wave 4 of Dogecoin's 5-wave structure.

In the near future, the TradingVolume analyst has predicted that Dogecoin's price will drop significantly after completing Wave 4. He believes that if the Cup and Handle pattern remains intact, Dogecoin could face downward pressure next week. The analyst also added that the cryptocurrency market in general may face similar bearish headwinds, especially with increased market volatility and declining Bitcoin prices.

Although the accuracy of the analyst's bearish forecast is not specified, Wave 4 corrections are often known to retrace significant portions of the previous Wave 3 gains. This means that if Dogecoin undergoes a downturn in Wave 4, the possibility of dropping below $0.20 could occur.

Dogecoin collapses first, recovers later?

While Cryptechcapital has predicted a significant downturn for Dogecoin, he also asserts that this anticipated correction could pave the way for a strong recovery. The TradingView analyst reveals that after completing Wave 4, Dogecoin is expected to enter Wave 5, signaling the end of the bearish phase and the start of a potential bullish rally.

As mentioned above, the Cup and Handle pattern often signals the final consolidation phase before a price breakout. The TradingView analyst has predicted that Dogecoin may undergo a severe downturn before triggering a price recovery to the coveted $1 level.

The analyst's price chart also emphasizes that if Dogecoin reaches a local high instead of continuing the expected correction, the Cup and Handle pattern will be invalidated. This development will require a new forecast for Dogecoin's price trajectory.

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