Following the Dogecoin price crash, there have been some interesting developments on the altcoin’s chart that could point to what direction it is headed in next. Multiple formations have suggested that the meme coin continues to lean bullish even through the negative market sentiment. However, there is still a risk of collapse that could erode the bullish sentiment and put the bears in charge once again.
Falling Wedge Pattern Says Dogecoin Price Is Bullish
After the crash below the $0.15 support, the Dogecoin price has now completed the formation of a falling wedge pattern, crypto analyst MyCryptoParadise revealed. Historically, a falling wedge pattern appearing on a chart is bullish for any asset, and Dogecoin is no different in this regard. Not only did the falling wedge pattern appear, but it did so right after a Change of Character formation, something that shows buyers are coming back to the table, according to the crypto analyst.
Other bullish formations include the RSI flashing a hidden bullish divergence. The MACD is also showing a bullish divergence, and all of these have culminated in perhaps one of the most bullish trends in recent times for the meme coin’s price.
Looking at the Dogecoin price movement over the last few days, this looks to be the case as some important support levels have been reclaimed. The price crash has also taken out lower liquidity levels in what the analyst calls a classic inducement grab. This has left only higher liquidity levels open. Therefore, if the buying continues, it will only lend strength to the already bullish formations and drive higher prices.
As the bullish factors line up, the likelihood of the Dogecoin price moving up grows higher. The analyst explains that as long as Dogecoin is able to successfully print a bullish candlestick pattern here, then there is a strong risk-to-reward ratio of betting on a move up.
On the flip side of this, though, is the possibility that the altcoin does not play out into the bullish scenario. The bearish scenario here would be if bulls are unable to hold support above $0.14 and the price ends up breaking down. In the case of another 15% crash where the price falls below $0.15, the analyst explains that the bullish thesis would be invalidated.
“If the price breaksdown and closes candle below this key support, the bullish scenario becomes invalid, and it’s better to wait for a more favorable structure to develop,” MyCryptoParadise explained.
Featured image from Dall.E, chart from TradingView.com
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