Elon Musk could play a key role in reviving the Dogecoin market from the ongoing, TerraUSD-led bearish slumber.
Dogecoin (DOGE) shows the prospect of undergoing a strong price rebound after reaching a technical support confluence on May 12.
DOGE's 45% price drop to $0.065 this week, or a 90% decline from its record high of $0.76 a year ago, was met with decent buying sentiment. As a result, the token underwent a modest price rebound on May 12, rising over 10% to $0.078.
Interestingly, Dogecoin's upside retracement move started near a confluence of two support levels: a multi-month downward sloping trendline and a horizontal line that preceded a 335% price rally in the week ending April 19 last year.DOGE/USD weekly price chart. Source: TradingView
Meanwhile, the falling trendline is part of a broader descending channel pattern. Its multiple retests as support in the last 12 months propelled DOGE's price toward the channel's upper trendline. If the pattern repeats, Dogecoin's rebound will stretch toward the upper trendline near $0.1, up almost 25% from May 12's price.DOGE/USD weekly price chart featuring 'descending channel' setup. Source: TradingView
The upside setup also picks cues from Dogecoin's daily relative strength index (RSI), now near its oversold threshold of 30 — a buy signal.
Conversely, a decisive move below the confluence support risks sending DOGE to $0.04, which has served as a strong support level in the February–April 2021 session. That would mean another 40% price decline before the next potential rebound.
The latest bout of selling in the Dogecoin market coincides with similar sentiment in the overall crypto and traditional markets, led by the Federal Reserve's decision to tighten monetary policy aggressively to curb rising inflation.
2/2... mainstream adoption of #cryptos not just to trade, but also to conduct everyday transactions for goods & services. The upshot: keep a close eye on the biggest stablecoin, #Tether. $USDT fell to $0.95 overnight & is back to $0.99 now.$BTC $ETH— DataTrek Research (@DataTrekMB) May 12, 2022
As DOGE holds above its technical support levels, its next potential bull case is none other than Tesla CEO Elon Musk.
The billionaire investor, who has emerged as one of the most celebrated Dogecoin backers, recently bought Twitter for $44 billion. Before the acquisition, he had suggested that the Twitter board start accepting DOGE as payments for their first-ever subscription service Twitter Blue.
Twitter has not revealed any plans to use DOGE for payments. But the prospect of it happening could put a price floor below the token in the coming weeks.
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