An analyst explained why Dogecoin could see a price increase of around 6,770% if this pattern continues for this meme coin.
Dogecoin has traded within a long-term ascending channel.
In a recent post on X, analyst Ali Martinez discussed a long-term pattern that the weekly price of Dogecoin has traded within. The pattern being referred to is the ascending parallel channel from technical analysis.
A parallel channel is a consolidation pattern formed when the price of an asset moves between two parallel trend lines. The upper line is created by connecting consecutive peaks, while the lower line connects the troughs.
While the asset is in the channel, it is likely to face resistance at the upper line and support at the lower line. Breaking any of these two levels could imply the continuation of the trend in that direction.
There are three types of parallel channels: the type parallel to the time axis, the type with a positive slope, and the type with a negative slope. The first type does not have a specific name, but the other two do; they are called ascending parallel channel and descending parallel channel.
With the way these two types have steep trend lines, they correspond to consolidation phases in the asset occurring in an upward or downward direction. Dogecoin seems to have moved within such a pattern over the past decade, as shown in the chart shared by the analyst.
From the chart, it can be seen that the price of Dogecoin has been stuck within this ascending parallel channel for a week throughout its history. The most recent retest occurred at the beginning of the year when DOGE found recovery from the bottom level.
As Martinez highlighted in the chart, the current trajectory of DOGE resembles the trends seen in the last two recent bull cycles. In each of those bull runs, this cryptocurrency experienced an initial explosion followed by a slight decline leading to the actual bull run.
In recent weeks, Dogecoin has declined, perhaps indicating that it is in a momentary bearish consolidation phase right now. Considering what has happened next in previous cycles, it is likely that this meme coin will soon start a bull run and peak at the highest level of the ascending channel.
Based on the current distance of the upper level of the channel, the analyst noted that Dogecoin would need a price increase of 6,770% to reach there. It is still unclear whether the ascending channel will continue to hold for this meme coin and whether something similar to what happened in the past will occur at this time.
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