- The renewed recovery trend in Dogecoin price gave a bullish breakout from the resistance of a four-month long wedge pattern.
- CVDD Channel highlighted a key accumulation zone for DOGE buyers near the $0.1 psychological level.
- A sharp downtick in Average Directional Index (ADX) shows weakening bearish momentum in price.
DOGE, the popular dog-themed memecoin, jumped over 20% in the last 72 hours to reach $0.142 trading value. While the buying pressure aligns with broader market recovery, the robust growth in DOGE can be attributed to price reaching a strong structural support with historic evidence for bullish reversal.
Dogecoin Finds Itself in a Historically Significant Support Band
Following the prevailing market correction, the Dogecoin price has reached one of the most significant accumulation zones in its trading history.. According to information shared by Joao Wedson, founder and CEO of the analytics platform Alphractal, the price of the asset has moved into the lower end of a special indicator known as the CVDD Channel.
This development comes after a rapid price increase of 20% in the last three days, which came after Dogecoin had its first interaction with the first marker in this lower band. Past patterns indicate these exact levels have acted as strong levels on numerous occasions when selling pressure tends to abate.
The CVDD, which stands for Cumulative Value Days Destroyed, is based on blockchain transaction records and is used to estimate the effective economic importance of coins being transferred. It focuses more on the movements of long-held holdings, in what amounts to the “destruction” of accumulated time-value when older coins change addresses.
Alphractal augments the base CVDD line with a series of bands derived from ratios – which are based on Fibonacci sequences – to help map recurring areas of market reaction. As shown in the bottom chart, the blue level has often been conceived with prolonged position building from buyers.
These zones are the result of the interaction between the age of coins, the volume of transfer and the historical price action and provide a structured approach to the identification of potential long-term points of interest. Historically, Dogecoin price consolidation within this range has often led to sustainable recovery in past market cycles.
The most recent reversal from the blue line accentuates that the dependent pressure at this floor is intact, and the Dogecoin price could build a meaningful reversal opportunity for buyers.
Dogecoin Price Exits 4-Month Downtrend
Over the past four months, the Dogecoin price has witnessed a significant correction from $0.3 to $0.117, registering a 61.7% loss. The downswing showcased a series of lower low and lower high formations within two converging trendlines, indicating the formation of a falling wedge pattern.
The declining nature of trading volume within this wedge accentuates the diminishing bearish momentum in price and potential for trend reversal. With the recent jump, the Dogecoin price gave a decisive breakout from the pattern’s resistance trendline, reinforcing the on-chain’s data for potential recovery in price.
The momentum indicator ADX plunged to 34% accentuates that the sellers are gradually losing its grip over this asset. If the breakout sustains, the Dogecoin price could surge roughly 20% to challenge the $0.2 psychological resistance.
DOGE/USDT -1d ChartOn the contrary note, if the Dogecoin price failed to sustain this breakout, the sellers could regroup and mark another breakdown attempt from $0.1.
Source: https://www.cryptonewsz.com/dogecoin-0-20-wedge-breakout-on-chain-support/
