Despite having solid foundations, DOGE could have a 20% price decline before the year is over.
As traders evaluated Twitter’s ability to develop a cryptocurrency wallet product, Dogecoin’s price surged to its highest levels in two months.
Another ‘Elon Musk-fueled Dogecoin Rally’
On October 27, DOGE’s price increased to $0.081. Two days after renowned tech writer Jane Manchun Wong asserted that Twitter is developing a wallet prototype that handles cryptocurrency deposits and withdrawals, the price increased by about 40%.
The link between Twitter and Dogecoin is Elon Musk. The CEO of Tesla and SpaceX won the tender to buy Twitter for $44 billion earlier this year. He later toyed with the concept of accepting Dogecoin as payment for the Twitter Blue subscription service on April 11.
Following Musk’s pro-crypto recommendation to the Twitter board, DOGE’s price increased 30% to $0.17 in just 10 days. The meme token, however, plunged precipitously in the aftermath, falling as low as $0.05 in June as Musk attempted to back out of the agreement, citing his worries about Twitter’s user counts.
In response, Musk was sued by Twitter, which ultimately led the court to decide in Twitter’s favor. Chancellor Kathaleen McCormick, the judge presiding over the legal dispute, rejected Musk’s requests to delay the trial, emphasizing that the agreement needs to be finalized by 5 p.m. ET on October 28.
On October 26, Musk updated his Twitter bio to Chief of Twit, and that same day, he paid a personal visit to the Twitter corporate offices. That increased hopes that Musk would complete the transaction by the court’s deadline, opening the door for Dogecoin to become a key component of the Twitter platform.
Risk of a 20% Decline in DOGE Price
Technically speaking, Dogecoin’s rebound appears to be reaching its limits as its price approaches a significant resistance confluence.
A multi-month descending trendline, the 50-3D exponential moving average (the red wave), and a horizontal level at $0.08 make up the confluence of three resistance levels on the three-day chart, as seen below.
Considering that DOGE immediately corrected after testing these resistance levels, the likelihood of the token moving lower seems considerable. The rising trendline that has been a support in previous months is close to the bottom goal of this move.
That means the price of DOGE will be about $0.06 in Q4/2022, or about 20% less than it is now.
In contrast, DOGE might look to the 200-3D EMA (the blue wave) near $0.11 as its next upside target if it decisively breaks out above the resistance confluence. Or, a 50% increase in price from the present level.