Dogecoin (DOGE) Price Prepares for a Bounce Back with Falling Wedge Pattern

Dogecoin (DOGE) price displayed an intraday decline of nearly 1% as it encountered resistance at $0.17. Nevertheless, the meme coin is preparing for a bounce with a falling wedge pattern, increasing the possibility of shaking out short-sided traders.

However, will this recovery rally liquidate nearly 1% of $1.65B DOGE open interest?

Dogecoin Price Analysis: 14% Breakout From Falling Wedge

The price action of Dogecoin is unfolding aحدث in the 4-hour time frame. Since April 23, the swing lows formed in Dogecoin connect to form a support trendline.

However, the bullish traders failed to push prices higher to form new swing highs, leading to the formation of an overhead resistance trendline. The converging trendlines gave rise to a falling-wedge pattern, presenting a barrier to the current trend in the DOGE price.

At the present moment, the price of Dogecoin is testing the lower boundary line of the falling wedge pattern with a lower price rejection. This maneuver increases the chances of a new uptrend developing from the pattern.

The MACD and signal lines are also aligning with the potential for an upside move as the average lines converge for a positive crossover.

Furthermore, Dogecoin is poised for takeoff as it takes a lower price rejection from the 200 Simple Moving Average line. The correction unfolding within the falling wedge pattern has resulted in the breakdown of the 50 and 100 SMA lines. This increases the possibility of a negative crossover between the average lines, which could serve as a sell signal.

According to Fibonacci analysis, a potential breakdown from the current price will likely impel a retest of the 38.20% Fibonacci level at $0.1560. Conversely, a bullish comeback in Dogecoin, clearing the overhead trendline, will likely propel prices by more than 14% to reach the $0.20 psychological mark.

Derivatives Data Warns Of Short Squeeze As Longs Clock 51.83%

As the falling wedge pattern holds Dogecoin, the sentiments in the derivatives market are gradually turning positive. As per Coinglass data, long positions surged to 51.83% in Dogecoin derivatives in the past 4 hours.

This has marginally turned the long-to-short ratio bullish at 1.076. As the long positions continue to surge, the Dogecoin volume-weighted funding rate is on the verge of flipping positive.

After momentarily dipping into negative territory, the Dogecoin funding rate stands at 0%. With the growing bullish confidence in the derivative market, the funding rate is likely to flip positive, reflecting bulls who are willing to pay a premium to keep their long positions.

Furthermore, the Dogecoin exchange liquidation map by Coinglass reflects that short-position holders are at a greater risk. If the Dogecoin price shows a bullish breakout, then an uptrend to $0.1735 will liquidate $14.18 million in short liquidations.

This could result in a short squeeze, which will further fuel the uptrend in the DOGE price. Thus, it could propel the Dogecoin price prediction of reaching the $0.20 mark.

Will 96M DOGE Token Unlock Affect Price?

The short-term price movement and derivatives data signal a potential bullish move ahead. However, the meme coin will witness a minor surge in supply with token unlocks this week.

As per the Tokenomist data, Dogecoin will witness an unlock of 97.89 million DOGE tokens, which is nearly $16.57 million in the next seven days. This accounts for 0.07% of the entire circulating supply of Dogecoin, registering a minor supply spike.

However, the linear nature of the token unlock is unlikely to lead to any sharp correction moves or exert significant pressure on the prevailing trend in the Dogecoin price.