Elon Musk's Twitter investment puts a 150% rally into play for Dogecoin
Dogecoin (DOGE) continues its rebound move four weeks after bottoming near $0.10 and is now promising more upside moves in Q2/2022.
Dogecoin price nears two-month highs
DOGE's price had risen by nearly 6.5% week-to-date to $0.15 a token. The coin's recent gains surfaced after Elon Musk disclosed his $3-billion stake in Twitter on Monday, reiterating his influence on its market.
Musk has been a big supporter of the Dogecoin community, including his decision to accept DOGE payments at his company Tesla's online merchandise store.
As Cointelegraph reported, Musk’s investment could help push Twitter’s crypto initiatives forward and even see DOGE integration on the social media platform.
So, @jack owns 2% of twitter, @elonmusk owns 9%!@jack loves BTC.@elonmusk loves $DOGE.
— Ran NeuNer (@cryptomanran) April 4, 2022DOGE's falling wedge breakout underway
Musk's Twitter investment also assisted Dogecoin in breaking out of a falling wedge pattern.
In detail, falling wedges are considered bullish reversal setups and appear when the price consolidates lower inside a range defined by two converging, descending trendlines while leaving behind a trail of lower highs and lower lows.
In a perfect scenario, falling wedges resolve after the price breaks decisively above their upper trendline. As it happens, traders typically eye a run-up toward the level that comes to be at length equal to the maximum distance between the wedge's upper and lower trendline.
As DOGE's price undergoes a similar pattern, its likelihood of continuing its uptrend has increased following the break above the trendline on April 4. Therefore, the coin now eyes a run-up towards $0.37, about 150% above today's price, as shown in the chart below.
DOGE price downside risks
Nonetheless, the bullish setup comes with downside risks. Notably, Dogecoin's breakout move above the falling wedge's upper trendline accompanies weaker volumes, suggesting that traders lack conviction in the rally.
Related: What Elon Musk’s investment could mean for Twitter’s crypto plans
DOGE also trades below two critical support levels: the 20-week exponential moving average (20-week EMA; the green wave) around $0.15 and the 50-week EMA (the red wave) near $0.17.
A pullback from the said price ceilings could have Dogecoin return to the falling wedge's upper trendline to test it as a newfound support level. On the other hand, an extended decline risks invalidating the entire bullish reversal setup.
Holding the wedge's upper trendline as support and breaking above the 20- and 50-week EMAs with strong volumes would keep DOGE's $0.37-target intact.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.