Will the price of Dogecoin (DOGE) increase by 30% or collapse?

In the past two weeks, the price of Dogecoin (DOGE) has significantly cooled down after a strong growth phase in the first half of September. To give an overview, DOGE has lost about 25% of its value since reaching its peak in February, near $0.30 on September 13.

This adjustment has brought the price back to a key support level, which has stimulated recoveries multiple times in this cycle. Does DOGE have enough momentum to recover to double digits, or are we facing a deeper correction?

The potential for a 30% increase while protecting the important support level

From a long-term perspective, the price of DOGE has shown a stable growth trend since June, with an increase of about 60% over the past three months. In particular, DOGE has adhered to an upward trend line (white line, dashed) which has served as a foundation for many price increases since April.

DOGE price chart | Source: CoinphotonIt is noteworthy that recoveries from this trendline support level in the past have often led to increases of 30%-40%. Currently, the price of DOGE is approaching the trendline around $0.22, but the most remarkable aspect is the convergence of multiple support levels in this area.

Specifically, the price range from $0.20 to $0.22 contains an important horizontal support level, along with the 200-day exponential moving average (EMA). EMA is a moving average indicator, where recent candles are weighted more heavily, reflecting the main trend of the market. Maintaining the price above the 200-day EMA indicates that the overall bullish trend is still being upheld.

In summary, if buyers can defend the $0.22 level and regain momentum, a recovery to around $0.27–$0.29 becomes very likely, opening up a potential increase of 30% from the current price. However, if the price breaks below the $0.20-$0.22 range, this could lead to a short-term drop to $0.18.

The RSI index shows bullish divergence near the key support level.

The RSI index, a popular indicator measuring market momentum, is at 43 at the time of writing. Readings below 50 indicate a reduction in bullish momentum, while readings near 30 often indicate an oversold territory.

The interesting thing is that a bullish divergence is currently appearing for DOGE: while the price is falling, the RSI is not making new lows and is slowly rising. A bullish divergence occurs when momentum improves despite falling prices, often indicating that sellers may be running out of steam.

Although it is not a guarantee, when divergences develop at support levels such as the $0.22 area and the 200-day EMA, the probability of a tradeable recovery will increase.

Important price level of DOGE for the next move

Analyst Ali Martinez pointed out that $0.20 is the most critical support level for DOGE based on the Realized Price Distribution. This metric reflects where coins have moved on-chain and identifies the area where many holders likely executed transactions.

In a recent article, Martinez emphasized a large trading cluster around the $0.20 level, indicating that many investors have established positions here. Prior analyses have also noted strong DOGE price activity at the $0.20 level, reinforcing the importance of this area.

Source: When the price returns to a high ownership area like this, usually two things happen:

With these factors, the price of DOGE is currently at a critical level. If it holds the support range from $0.20 to $0.22, a 30% recovery is very feasible. However, if the price falls below this support level, DOGE may face a deeper correction in the short term.

Mr. Teacher