Dogecoin (DOGE) has broken from an important horizontal support level but is trading within a bullish pattern and showing signs of a bullish reversal.

Since June 21 (green icon), DOGE has been trading above the $0.17 horizontal support area, starting several bounces in the process. However, it definitely broke on January 20th and went on to validate the area as resistance on February 8th.

When looking at the long-term move, there is no clear horizontal support area up to $0.057. This level has not been reached since April 2021.

High DOGE standard

A closer look at the movement shows that DOGE has been following a descending resistance line since August 15th. More importantly, it has been trading inside a descending (dashed) wedge since Oct 28th.

The descending wedge is considered a bullish pattern. Therefore, an escape from him would be the most likely scenario.

In addition, there is a very significant bullish divergence that has developed on both the RSI and MACD. This is an occurrence that often precedes uptrend reversals. Therefore, it supports the scenario where the DOGE comes out of the wedge.

If the breakout occurs, the next resistance will be at $0.20, lining up with the long-term descending resistance line.

The two-hour chart shows that DOGE has bounced off the horizontal support area at $0.125. This same level started the previous upward move on January 22nd. Relative to this price, this creates a triple bottom, which is also considered a bullish pattern.

Wave count analysis

Cryptocurrency Trader @JacobEmmerton stated that DOGE is on wave four of a five-wave upward move.

The most likely wave count suggests that DOGE is on wave four of a five-wave upward move. However, the exact shape of wave four remains unclear.

As stated in the first section, the next closest support area is at $0.065. This also coincides with the resistance line of an ascending parallel channel connecting waves one and two. Therefore, it is a potential lower level for the current correction.

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However, a closer look shows a possibly completed ABC corrective structure (white), in which the A:C waves had a ratio of 1:0.382. The C wave took the form of a ending diagonally (Black).

Therefore, it is possible for DOGE to break out of the current wedge and reclaim the $0.179 area later on. However, if that doesn’t happen, the most likely scenario would suggest that a drop of up to $0.065 will occur.

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