Dogecoin price risks 40% correction despite Elon Musk – Twitter euphoria

Dogecoin (DOGE) prices flipped higher in the last 24 hours after its most celebrated backer, Elon Musk, purchased Twitter for $44 billion. At its best, Dogecoin had climbed to $0.17 on April 25, albeit still down 77% from its record high in May 2021.

Twitter’s native currency: Dogecoin?

DOGE’s price rose by nearly 25% to $0.15 on a 24-hour adjusted timeframe, confirming that traders considered Musk’s acquisition of Twitter a bullish event for Dogecoin.

The reason: Musk’s long-time support for DOGE, including his recent advice to the Twitter board that they should start accepting the memecoin for Twitter Bluetheir first-ever subscription service.

The comments appeared a year after Twitter revealed that it plans to double its revenues to $7.5 billion by the end of 2023, raising hopes that Musk’s 100% ownership of the company would have it facilitate its future sales through an additional DOGE payment option.

In January, Musk’s flagship company Tesla Motors started accepting Dogecoinand only DOGE, for some of its merchandise.

Related: What Elon Musk’s investment could mean for Twitter’s crypto plans

DOGE price correction risks

Nevertheless, Dogecoin faces interim selloff risks following its impressive gains in the past 24 hours.

DOGE’s price started correcting lower after re-testing a multi-month downward sloping trendline as resistance.

Interestingly, the line constitutes a descending channel pattern, which raised the possibility of DOGE extending its pullback move by another 35%-40% by the end of Q2, as illustrated in the chart below.

DOGE/USD daily price chart featuring ‘descending channel’ setup. Source: TradingView

The selloff risks toward the channel’s lower trendline also remain elevated due to the 200-day exponential moving average (EMA) wave near $0.16, which has been capping Dogecoin’s upside attempts since November 2021.

DOGE/USD daily price chart featuring Fib S/R levels. Source: TradingView

Conversely, a strong upside continuation above the channel’s upper trendline and the 200-day EMA would position DOGE’s price for a test of $0.20 in Q2. This key level also coincides with the 0.382 Fib line of the Fibonacci retracement graph, drawn from the $0.35-swing high to the $0.10- swing low.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.