Most traders are looking at Dogecoin on a daily or weekly schedule, reaction to daily price action. However, the monthly candlestick chart tells a different story, developing from the 2021 cycle and now approaching a turning point.
Technical analysis shows that a huge bullish pennant is forming on the DOGE/USD monthly chart. Dogecoin is currently at lower support on the pennant and the technical implications are significant.
The giant pennant will be formed from the 2021 Rally
Monthly chart It shows that the price of Dogecoin is squeezing between two converging lines, forming what looks like a large bullish pennant. The structure starts from the flag pole: the near vertical trend that started Dogecoin from $0.01 to the all-time high of $0.73 in May 2021.
From this peak, the DOGE price action forms a symmetrical triangle on the monthly chart, with a series of highs and lows converging steadily towards the peaks. The upper bound falls below the peak reached during the 2021 bull run, forming a descending resistance line that has rejected several major rallies since then.
The lower boundary, on the other hand, gradually rises from the base formed after the previous rally has cooled to create a higher low. The lower trendline provided continuous support and, critically, it held last month when the price tested the $0.08 area.
As shown in the Dogecoin monthly candlestick chart below, these two lines have created a triangle formation that continued to shrink from 2021. Multiple pivot points on the chart show that price reacts to these boundaries and the structure is respected many times over time.
Here’s what to expect from a Bullish pennant
One of the most important details in the diagram is this last communication with lower trend line. Dogecoin fell to the rising support boundary in February and was absorbed. This visit occurred around the same area where Dogecoin was trading recently, just below the $0.09 level.
At the time of writing, Dogecoin is trading at $0.094. it is still close to support. Holding this support and closing it in March is important for the structure, as the bullish pennant depends on the price inside the convergence zone. If the DOGE closes the month below the lower trend line, then the bullish outlook is weakened.
On the other hand, the bullish outlook depends on Dogecoin breaking above the end of the bullish pennant. The measured goal of the movement of the flagpole is calculated from the height of the flagpole projected from the break point. Given the scope of Dogecoin’s flagpole in 2021, even conservative forecasts point to well above $1, with upper targets in the $3 to $4 range.
However, there is still a lot of work to do for the DOGE to return to the upper line before the breakout. Specifically, Dogecoin should break above $0.32 and close consecutive months above this level.
Featured image from Pixabay, chart from Tradingview.com
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