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Dogecoins (DOGE) price hit its best levels in two months as traders assessed Twitter’s potential to create a cryptocurrency wallet product.

Elon Musk Fuels the Dogecoin Rally Again

The price of DOGE jumped to $0.081 on October 27. The price rose by around 40% two days after Jane Manchun Wong, a popular tech blogger, claimed that Twitter was working on a prototype wallet that supports cryptocurrency deposits and withdrawals.

DOGE/USD daily price chart. Source: Trading View

Elon Musk is the thread that connects Dogecoin and Twitter. Earlier this year, the CEO of Tesla and SpaceX won the auction buy Twitter for $44 billion. Later, on April 11, he flirts with the idea of add Dogecoin as a payment method for the Twitter Blue subscription service.

DOGE’s price rose 30% to $0.17 in 10 days after Musk’s pro-crypto suggestion to Twitter’s board. But the memetoken fell drastically thereafter, hitting as low as $0.05 in June as Musk attempted to back out of the deal, citing concerns over Twitter user numbers.

Twitter continued Musk in response, ultimately prompting the court to rule in his favor. Chancellor Kathaleen McCormick, the judge overseeing the legal battle, denied Musk’s attempts to postpone the trial, noting the deal is expected to close by 5 p.m. ET on October 28.

Musk changed his Twitter bio to “Chief of Twit” on October 26, followed by a personal visit to Twitter headquarters the same day. This raised anticipations that Musk would close the deal before the court deadline, paving the way for Dogecoin to become an integral part of the Twitter platform.

DOGE Price Risks a 20% Correction

From a technical standpoint, Dogecoin’s recovery is showing signs of exhaustion as its price tests a strong confluence of resistance.

On the 3-day chart, the confluence includes three resistance levels: a descending multi-month trendline, the 50-3D exponential moving average (the red wave), and a horizontal level around $0.08 as shown below. -below.

Three-day DOGE/USD price chart. Source: Trading View

Considering DOGE’s immediate correction after testing these resistance levels, the possibility for the token to drop seems high. Meanwhile, its downside target is near the uptrend line that has served as its support for the past few months.

This puts the price of DOGE on its way to around $0.06 in Q4/2022, which is around 20% below the current price.

Related: How long will the bear market last? Signs to watch for a crypto market reversal

Conversely, a decisive break above the confluence of resistance could cause DOGE to consider the 200-3D EMA (the blue wave) near $0.11 as a next upside target. In other words, a 50% boom from current price levels.

The views and opinions expressed herein 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.