Dogecoin (DOGE) Flashes Buy Signal: Is A 500% Pump Next?

Key Takeaways:

• Dogecoin rebounded from a key support level, hinting at a potential trend reversal.
• Historical patterns suggest that a major price pump could follow the current retracement.
• Liquidation of short positions could push DOGE toward $0.2146, fueling bullish momentum.

Dogecoin has reacted strongly to a critical support level of $0.143, showing a price rejection that hints at a potential trend reversal. The daily candle closed with a lower wick at $0.14297, indicating a bounce from this key level.

But further tests of this level are still possible ahead of confirming the uptrend. There are analysts who think a short-term price drop through this level could be a manipulation attempt prior to a strong bounce.

The TD Sequential indicator has also given a buy signal for Dogecoin in the daily chart, lending strength to the possibility of a bounce. Previously, the signal came before major price rallies and the traders are thus expecting a bounce. The market participants are advised though to remain vigilant about price action to confirm the bullish reversal.

Dogecoin Historical Trends Hint at Massive Price Surge

Dogecoin saw three significant retracements after the month of October 2022, with the first two correcting by approximately 64% before embarking on gigantic spikes by 300% and 500% respectively.

The recent 66% pullback is consistent with the pattern of past corrections leading to explosive breakouts. If the pattern is followed through, DOGE could be set for a major pump. This trend suggests the recent drop of Dogecoin might be the starting point for the next major rally.

With it still trading near critical support levels, the expectation is for the price surge seen in the past cycles. If the momentum shifts towards the bull side, DOGE might follow the trend of high gains after deep corrections.

Liquidation Risk Could Drive Prices Higher

Much of the short positions short against Dogecoin could be behind its next move. Approximately $29.15 million’s worth of short positions are exposed to liquidation when the price reaches $0.2146. A liquidation event such as this could drive a further push higher and initiate a short squeeze.

In the longer term, Dogecoin is resting near the same parallel line it grazed against in past cycles. Both 2017 and 2021 experienced the same setup leading into gigantic breakouts.

Experts believe the last trough is close to the point of confirmation and the parabolic phase can begin soon. Based on the pattern of previous cycles, DOGE could rally towards the level of $1.75 in the longer term.

Related Reading | Dogecoin (DOGE) Faces Major Decline, but Recovery Signals Hint at a Potential Surge