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An analyst has explained how Dogecoin (DOGE) could see a huge rally if it can manage to stay afloat at a crucial level.

Analyst Explains Potential DOGE Breakout

Analyst Ali Martinez has pointed out a long-term pattern forming in the weekly price of Dogecoin.

The pattern in question is the Ascending Channel from technical analysis (TA), which is a type of Parallel Channel. A Parallel Channel is a consolidation pattern in which the price of an asset is contained by two parallel trendlines. The upper level of the channel is likely to provide resistance, while the lower one can be a point of support.

An asset is said to ‘break out’ of a channel when it closes a candlestick completely above or below the channel. A breakout from either of these lines can imply a continuation of trend in that direction. That is, an escape from the top is bullish, indicating more buying pressure, and a drop from the bottom is bearish, showing more selling pressure.

Parallel Channels can be categorized into three types, based on the alignment of the trendlines with respect to the coordinate axes. Channels that are sloped upwards (that is, they have trendlines that follow higher lows and higher highs) are known as Ascending Channels. While an asset is inside this type of channel, its price witnesses consolidation to the net upside.

Similarly, those of the opposite orientation are called Descending Channels and represent consolidation to the net downside. The third case, where the trendlines are parallel to the time-axis, has no special name.

Now, here is the chart shared by the analyst, that shows an Ascending Channel that the weekly price of Dogecoin has been trading inside for the past decade:Credit: X - Ali Martinez

As is visible above, the 1-week Dogecoin price has seen a sharp decline recently and is approaching the lower level of the channel at $0.16. The last time that the memecoin tested this line was during the last few months of 2024 and it managed to find support back then.

“All eyes on Dogecoin $DOGE! If it holds this level at $0.16 and bounces, a move to $2 could be next!” notes the analyst.

This $2 target is roughly around where the asset would meet the middle line of the channel, a level that has also shown resistance to the cryptocurrency in the past.

It remains to be seen, however, whether the memecoin will indeed find support and the Ascending Channel will continue to hold. There is always a chance of a breakdown from patterns like these, which, as mentioned earlier, can lead to bearish price action.

Where Will DOGE Go Next?

Dogecoin is currently trading at $0.175 at the time of writing, having seen a 20% drop over the last seven days.

The memecoin hit a high of $0.28 earlier this week, before sellers stepped in and pushed its price back down. If the bears manage to break the $0.15 support, then it could continue falling to the next point of demand at $0.10.

On the other hand, if the bulls can defend the $0.16 level and push the price back above the $0.20 resistance, then it could continue rallying to the next resistance point at $0.25.

Ultimately, the direction of the Dogecoin price will depend on the balance of supply and demand. If there is more buying pressure than selling pressure, then the price will go up. Conversely, if there is more selling pressure than buying pressure, then the price will go down.