Dogecoin’s recent price action has shown more stagnation than strength, leaving investors uncertain about its next major move. A technical analyst using Elliott Wave theory has shared a long-term outlook suggesting that Dogecoin could be in a corrective phase that may extend further than most traders expect.
According to the analyst, the current formation could trace back to a much deeper level in what he described as the worst-case scenario for Dogecoin.
Long-Term Structure Suggests Extended Wave 4 Consolidation
The analysis revisits Dogecoin’s structure dating back to its 2021 peak, when the meme coin reached $0.73 at the height of meme coin euphoria. The analysis proposes that since then, Dogecoin’s price action has been trapped in a multi-year corrective wave to form what looks like a wave 4 pattern that began around May 2021. The prolonged sideways consolidation has produced overlapping structures marked by alternating A-B-C corrective sequences, consistent with a complex Elliott Wave correction.
The analyst noted that the price pattern could alternatively be forming a leading diagonal that started in late 2023. Leading diagonals often appear at the beginning of a new impulsive cycle, but they are also characterized by steep retracements before the larger trend continues. He added that Dogecoin’s retracement has already satisfied the 0.5 Fibonacci retracement level, while the 0.618 level, which is considered a stronger support zone, lies only a few cents away.
Despite Dogecoin bulls defending around current support zones between $0.15 and $0.17, the technical analysis projected a potential deeper drop scenario. In this case, the worst-case outlook would involve Dogecoin revisiting the “single-digit cents” area, specifically the 0.618 to 0.786 Fibonacci retracement levels, as shown on the chart below.
This projection is based on a possible retest of the lower boundary of the long-term channel, a move that could complete sub-impulse wave (ii) or a final leg C below $0.10 before the next impulsive wave begins.
Bullish Implications Beyond The Correction
The idea of Dogecoin falling below $0.10 would seem far-fetched for most traders, especially since the meme coin has consistently managed to hold the $0.15 to $0.16 range during corrections. Yet, this possibility cannot be completely ruled out, considering the meme coin is only a 33% move to $0.10 if the selling pressure intensifies enough to push it below $0.15.
Such a decline would not necessarily invalidate a long-term bullish structure, but it would reflect a final flush-out typical of late-stage corrections in an impulse wave that goes back as far as mid-2021.
However, if support at or near $0.16 continues to hold, the next rally could aim above $0.5. A break and close above $0.5 will invalidate the fourth impulse wave analysis. At the time of writing, Dogecoin is trading at $0.1774, down by 1.9% in the past 24 hours.
Featured image from Pixabay, chart from Tradingview.com
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