Dogecoin Could See 40% Pullback Despite Excitement Over Elon Musk’s Twitter Takeover

The price of Dogecoin (DOGE) has surged over the past 24 hours after Twitter agreed to buy the company for $44 billion from its most prominent backer, Elon Musk. On April 25, Dogecoin climbed to $0.17, although it is still down 77% from its May 2021 all-time high.

Twitter's native currency: Dogecoin?

The price of DOGE jumped nearly 25 percent in 24 hours to $0.15, confirming traders’ view that Musk’s acquisition of Twitter is a positive for Dogecoin.

Why: Musk’s longstanding support for DOGE, including his recent proposal to Twitter’s board of directors, led to Twitter’s first subscription service, Twitter Blue, accepting Dogecoin.

A year ago, Twitter announced plans to double revenue to $7.5 billion by the end of 2023. This has led to hopes that Musk's 100% ownership of the company will allow it to boost its future revenue through the additional DOGE payment option.

Elon buys Twitter --> DOGE becomes Twitter's currency --> DOGE is no longer a meme currency!

how does it sound

— Limbo (@CryptoLimbo_) April 25, 2022

In January, Musk’s flagship company Tesla began accepting Dogecoin, and only DOGE, and only for some of its products.

DOGE price correction risk

Still, Dogecoin is at risk of a sell-off after its massive gains over the past 24 hours.

The price of DOGE started correcting lower after retesting a multi-month descending trendline that acted as resistance.

Interestingly, this line forms a descending channel pattern, which increases the likelihood that DOGE will extend its pullback by another 35%-40% by the end of the second quarter, as shown in the chart below.

DOGE/USD daily chart shows "downtrend channel" Source: TradingView

With the 200-day exponential moving average (200-day EMA) swinging close to $0.16, the risk of a sell-off towards the channel's descending trendline remains high.

Conversely, a strong upside continuation above the channel's ascending trendline and 200-day EMA would see DOGE's price test $0.20 in the second quarter. This key level also coincides with the 0.382 Fibonacci retracement line on the Fibonacci retracement chart.

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