Dogecoin (DOGE) Enters Critical Phase, Faces Crucial Test: Will It Maintain Upward Trajectory or Suffer a Significant Pullback?

After demonstrating remarkable strength over the past few years, Dogecoin (DOGE) has now entered a critical phase in its price action.

Dogecoin (CRYPTO: DOGE) had an interesting 2023 so far, with a massive rally from its lows during the bear market. But now, as DOGE price approaches a critical juncture, the question arises: Will it maintain its upward trajectory, or is a significant pullback in the cards?

Dogecoin Recent Rally And The Imminent Risk Of A Pullback

After a period of consolidation below the $0.10 mark, Dogecoin price showed remarkable resilience with a rally from its lows. This sustained upward movement had many traders anticipating a new all-time high (ATH). However, a closer examination of the latest trading pattern and technical indicators suggests a potential 20% pullback in the near future.

The price action suggests that DOGE is encountering resistance at crucial support levels. If the bulls fail to defend these levels, the price could slide back by as much as 20%. This has left many traders questioning whether the current bullish trend will continue or if a reversal is on the horizon.

Dogecoin Follows In The Footsteps Of PEPE: A Potential Warning Sign

Dogecoin price has been following a trajectory similar to that of PEPE, which, after garnering massive attention, became the third-largest meme coin by market capitalization. PEPE's price action showed impressive gains, but it also faced pullbacks along the way.

As evident in the comparison of DOGE and PEPE price charts, Dogecoin appears to be mirroring PEPE's earlier rally, which saw a period of consolidation around its ATH followed by a sharp pullback. If DOGE continues to follow this pattern, it could experience a 30% drop similar to PEPE's decline from its ATH. Currently, DOGE price has approached local support, and if the bulls fail to initiate a rebound, a 20% pullback could be on the horizon.

What The Technicals Say About Dogecoin Short-Term Outlook

The current technical setup for Dogecoin is showing increased bearish pressure, especially after the price dipped below a crucial ascending trendline that had been providing support. The failure to recover these lost levels suggests that the price may continue to face downward pressure.

The Relative Strength Index (RSI), which is currently below its descending trendline, indicates that DOGE is entering bearish territory. Based on these indicators, there's a strong possibility that Dogecoin will lose support at $0.30 and fall toward the support zone between $0.29 and $0.309.

If the price fails to hold these levels, the next logical target could be a move toward the $0.246 range, which aligns with the 0.382 Fibonacci retracement level. This would mark a significant pullback, possibly triggering a rebound if the RSI hits oversold levels.

As the price approaches these key support levels, traders will be closely watching for any signs of a rebound. A failure to recover above $0.3 could pave the way for a deeper drop toward $0.20.

Given the volatile nature of the crypto market, Dogecoin's future price action remains uncertain. However, the upcoming days and weeks could prove crucial in determining whether this pullback turns into a larger correction or if DOGE will stage a comeback and push through resistance once again.