Despite Elon Musk’s Twitter excitement, the Dogecoin price faces a 40% reversal

Elon Musk’s $44 billion acquisition of Twitter increases Dogecoin by 25% in the last 24 hours, but selloff concerns persist.

Dogecoin (DOGE) values have flipped higher in the last 24 hours following Elon Musk’s acquisition of Twitter for $44 billion. At its peak on April 25, Dogecoin was trading at $0.17, still 77 percent behind its May 2021 record high.

Dogecoin is Twitter’s native currency.

DOGE’s price increased about 25% to $0.15 on a 24-hour adjusted basis, indicating that traders viewed Musk’s acquisition of Twitter as a bullish development for Dogecoin.

The reason: Musk’s long-standing support for DOGE, most recently advising the Twitter board to begin accepting the meme-crypto for Twitter Blue, the company’s first subscription service.

The statements come a year after Twitter announced intentions to increase its revenue to $7.5 billion by the end of 2023, generating hopes that Musk’s 100% ownership would enable the business to facilitate future sales via an additional DOGE payment option.

Musk’s Tesla Motors began taking Dogecoin, and just DOGE, for some of its items in January.

Risks of a DOGE price correction

Nonetheless, Dogecoin is at risk of an interim selloff following its meteoric rise over the last 24 hours.

DOGE’s price began declining after re-testing a multi-month downward sloping trendline that served as resistance.

Interestingly, the line forms a descending channel pattern, suggesting that DOGE could extend its pullback by another 35% -40% by the end of Q2, as indicated in the chart below.

The risks of a selloff into the channel’s lower trendline remain significant as well, owing to the 200-day exponential moving average (200-day EMA) wave near $0.16, which has been limiting Dogecoin’s bullish attempts since November 2021.

On the other hand, a strong upward continuation above the channel’s upper trendline and 200-day exponential moving average would position DOGE’s price for a Q2 test of $0.20. This critical level also coincides with the 0.382 Fibonacci retracement line established from the $0.35 swing high to the $0.10 swing low on the Fibonacci retracement graph.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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