An analyst has pointed out how Dogecoin could see a rally to $0.50, if the upper boundary of this technical analysis pattern breaks.
Dogecoin Is Currently Trading Inside A Parallel Channel
In a new post on X, analyst Ali Martinez has shared a technical analysis (TA) pattern forming in the 1-day price of Dogecoin. The pattern in question is a Parallel Channel, which forms when the price of an asset observes movement restricted between two parallel trendlines.
The upper line of the channel is likely to provide resistance, while the lower one support. A break out of either of these boundaries can imply a continuation of trend in that direction.
There are a few different types of Parallel Channels, depending on how the trendlines are arranged relative to the chart axes. When the trendlines are slopped upward, the pattern is known as an Ascending Channel. Similarly, them pointing down results in what’s called a Descending Channel.
In the context of the current topic, the variant of interest is neither of these, but rather the most simple case of Parallel Channels: a channel that’s parallel to the time-axis. This type emerges when an asset observes consolidation in an exactly sideways manner.
Here is the chart shared by Martinez that shows the Parallel Channel that the 1-day Dogecoin price has been trading inside for the last few months:
As is visible in the above graph, Dogecoin retested the resistance line of the Parallel Channel in July, but ended up finding rejection. The midway line of the channel stabilized the asset’s drawdown and since then, the coin has been moving in a tight range in the upper half of the pattern.
Currently, the memecoin’s trajectory is pointing in the direction of the upper level, which is situated at $0.29, but for now, its price remains a notable distance below it. In the scenario that another retest occurs in the near future, the outcome may be interesting to watch, as it could have implications for DOGE’s value.
According to the analyst, the cryptocurrency could be looking at the $0.50 mark, if its price can break past this barrier. The target is based on the fact that Parallel Channel breakouts can be of the same length as the width of the channel.
From the current price of Dogecoin, a potential bullish breakout to the level would imply a positive return of around 104%. It now remains to be seen how the memecoin develops in the near future, with respect to the Parallel Channel.
DOGE Price
At the time of writing, Dogecoin is trading around $0.245, up more than 12% over the last week.