Dogecoin falling wedge pattern: Bullish signal or inflation barrier?

Cryptocurrency analyst @ali_charts on X has drawn attention with technical analysis showing that Dogecoin ($DOGE) is forming a falling wedge pattern. Shared on July 31, the chart highlights a potential bullish reversal, predicting a price target of $0.265 - a significant increase of 18.6% from the closing price of $0.223329 on the same day, according to CoinMarketCap. The falling wedge pattern, characterized by converging trend lines from the low in mid-July to the high at the end of July, is often regarded as a precursor to an upward breakout, especially under conditions of low trading volume. However, the cryptocurrency community remains divided on its significance.

The upward price trend depends on technical precedents. A 2025 study from the Journal of Financial Markets shows that the falling wedge pattern has a success rate of 65% in bullish breakout phases when trading volume decreases during consolidation. The chart from @ali_charts also aligns with this, showing a narrowing price range, signaling accumulation by buyers. Optimistic users on X, such as @Spahija_23, believe a breakout could push DOGE to $0.43, while others, like @Solarweb33, praise the "classic wedge pattern." However, skepticism remains. @Shan_Specter argues that the lower peaks of this pattern dampen optimism, and @joelovestrading warns about the inflation mechanism of Dogecoin - 5 billion coins added annually since 2014, according to Wikipedia - which could potentially limit price increases. Inflation presents a significant counterargument. Unlike Bitcoin's fixed supply, the increasing circulating supply of Dogecoin ( reduces inflation from 5% in 2015 to 2% in 2035), which could diminish its value, especially if demand does not exceed supply. The Journal's research notes that the success rate of such models drops to 40% with assets that have high inflation, encouraging traders to consider broader market sentiment and support levels around $0.10-0.15, as noted in web analyses like Mitrade.com. With the current price action near the peak of the wedge pattern, a decisive breakout above resistance is crucial. Currently, Dogecoin enthusiasts are closely monitoring. The falling wedge pattern brings hope, but inflation and market volatility may undermine the target of $0.265. Traders are advised to combine technical analysis with fundamental analysis before taking action.