Dogecoin Shows 400% Potential Rally Despite 70% Price Dip

Dogecoin (DOGE) has experienced a significant price dip of nearly 70% from its December 2024 high, leading some to consider selling the token. However, a closer examination of the DOGE chart reveals a clear pattern on the weekly chart, indicating a strong long-term bullish trend. The cryptocurrency has been moving within a broadening ascending channel, forming a series of higher lows and higher highs. This pattern suggests that despite periods of deep corrections, DOGE is poised for a potential rally.

Since reaching its all-time high of approximately $0.73, DOGE has seen sharp drops but has consistently remained above a long-term trendline established in 2020. This trendline acts as a strong support, preventing the price from breaking below it even during tough market conditions. Each time the price touches this support line, it eventually bounces back, setting the stage for a potential significant rally. The chart projects a path where DOGE could move up in waves, experiencing smaller pullbacks before heading higher. If this broadening channel continues to guide price action, Dogecoin could eventually retest and even break past its previous all-time high, implying a 400% move from current levels to return to $0.73.

This pattern indicates that Dogecoin is building strength for a long-term rally. The broadening formation shows that as long as the price respects this upward trendline, the probability of reaching new highs remains intact. While volatility is likely along the way, the overall structure of DOGE's price signals that a new all-time high might not be a matter of if, but when.

Dogecoin has shown early signs of a bullish reversal after weeks of consolidation. This reversal is supported by a breakout from a falling wedge pattern and improving technical indicators. The cryptocurrency has started to regain market traction, trading above $0.17. This move has triggered cautious optimism among traders who believe a bigger move could be in play. The Relative Strength Index (RSI) has rebounded from oversold levels, sitting around 44. A rise above 50 would indicate improving momentum. A key catalyst behind the recent bullish sentiment is the emergence of a falling wedge pattern—a technical structure often associated with reversals. This pattern, confirmed by historical price action and trading volume, suggests a potential breakout is underway. DOGE has bounced multiple times off its $0.15 support zone, a level that has historically attracted buyer accumulation.

Technical analysis shows the coin trading near the wedge’s upper boundary, testing the $0.1690 resistance level. A daily close above this zone could propel the Dogecoin price toward the $0.1819 and $0.2018 Fibonacci retracement areas. The RSI currently hovers near 44 and is rebounding, signaling increasing buying pressure. Derivatives market metrics paint a similarly optimistic picture. Open interest in Dogecoin futures has climbed, while spot trading volume surged, indicating rising trader engagement. Additionally, options volume exploded, suggesting that traders are positioning for a major move.

The 24-hour Long/Short Ratio sits at 1.0313 overall, but on major exchanges, the ratios are far more aggressive, indicating confidence in a potential breakout, but it also raises the risk of a sharp correction if price momentum falters. Liquidation data further supports this bullish tilt. Over $2.2 million in short positions were liquidated recently, highlighting that bearish traders may be getting squeezed as DOGE continues to test higher levels.

Dogecoin has a notable history of following through on falling wedge breakouts. In previous cycles, such formations have led to price surges ranging from 88% to over 400%. The current setup mirrors similar patterns, with the price of Dogecoin showing resilience above the $0.15 mark and attempting to breach the key resistance near $0.17. Analysts emphasized this breakout potential, noting that a move above $0.17 could open the door to targets at $0.20, $0.26, $0.31, and $0.39.

Recent on-chain data also indicates increased Dogecoin whale activity. DOGE has experienced rising large transactions and a notable cooldown in liquidations. After a sharp leverage flush, liquidation dominance has fallen, a sign that the market is stabilizing and may be entering a new accumulation phase. The current setup can be a disguised bear trap. Although there have been numerous spoof breakouts during the past few months, the fundamental indicators currently point to a superior setup, with strategic buying reportedly underway as bulls fight to preserve key support levels.

Bullish Scenario: A clean breakout above $0.1690, with reversal of $0.1749 to support, might take DOGE to the $0.2018 level, with extensions to $0.2463 if supported by volume. Bearish Scenario: A drop below $0.15 may break the wedge pattern and expose the price to bearish risk down to $0.1350. Neutral Scenario: Sideways action continued between $0.15 and $0.17 as the market builds structure for a clean breakout or breakdown.

One of the biggest questions in the crypto space is whether Dogecoin will hit $1. While the current setup doesn’t offer that guarantee, the technicals and price action favor a guarded optimism in the near future. A breakout above the wedge with confirmation in volume terms can be the starting point in that direction, but macroeconomic fundamentals and market sentiment will have important roles to play. As one of the top meme coins, Dogecoin continues to serve as a barometer for retail market sentiment. Whale accumulation, rising open interest, and technical indicators all suggest that DOGE may be preparing for its next significant move.