Dogecoin ignited on May 13 following a subtle tweet from Elon Musk where he announced that he had begun working with Dogecoin developers to enhance system transaction efficiency. The sizeable price rebound is only sustainable if it can rally beyond $0.597.
Before the Elon Musk-inspired rally on May 13, Dogecoin had been drifting in a descending channel on the 4-hour DOGE/USDT chart following two failed attempts to overcome the topside trend line originating at the January 29 high and running through the April 16 high at a price of $0.453.
During the channel decline, Dogecoin price identified support at the convergence of the 61.8% Fibonacci retracement of the rally beginning on April 22 at a price of $0.371 with the 200 four-hour simple moving average (SMA) at a price of $0.339. It was a bullish prelude to the Elon Musk announcement.
Currently, Dogecoin is trading slightly below the price of $0.597, a significant level that will confirm the bullish intentions of Dogecoin. A successful breakthrough leaves DOGE price ready to race to the 138.2% extension of the April decline at $0.711. The support level will be challenging because it created resistance on May 5 and May 7.
An escape above $0.711 will prompt a test of the topside trend line at a price of $0.841, a level that converged with the 138.2% extension on May 5 and May 7 to repel the Dogecoin rally.
If FOMO enters the market, the Dogecoin price should overcome the resistance and rally to the 161.8% extension of the April decline at $0.940 and potentially to the psychologically important To price of $1.00, representing a 90% gain from the price at the time of writing.
A decline below the April 16 high at a price of $0.453 will raise the odds that Dogecoin price shapes a more complex bottom at best or has effectively printed an important high on May 8. To confirm a bearish outlook for Dogecoin, the altcoin needs to decline below the firm support level of $0.371, the intersection of the 61.8% retracement and the 200 four-hour moving average.
A breakdown below the price of $0.371 places DOGE investors in a vulnerable position with no credible support until $0.138.
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