The meme coin Dogwifhat (WIF), which has the largest market capitalization on Solana, has shown a noticeable recovery over the past 30 days. This rebound has caused WIF's price to rise by 50%, nearly retesting the $3 level.
Despite the impressive rally, technical analysis suggests that this classic bearish formation could potentially signal an impending decline.
Formation of a Dogwifhat Bearish Pattern
On October 14, WIF's price reached nearly $3. However, due to the $2.82 resistance, the meme coin failed to reach that critical level again for the first time since July.
Accordingly, BeInCrypto observed that WIF has formed a rising wedge on the daily chart. This pattern, also known as an ascending wedge, occurs when two upward-sloping trendlines converge, suggesting an impending bearish trend reversal.
In most cases, this wedge indicates that the cryptocurrency has reached a local top. For WIF, the local top appears to have been reached on Monday when the green candle's wick touched $2.96.
Read more: How to Buy Dogwifhat (WIF) and Other Information
The Money Flow Index (MFI) is another indicator that suggests potential correction for WIF. The MFI evaluates trading volume and price to measure the market's buying and selling pressure.
An increase in the MFI indicates that buying pressure is increasing, while a decrease suggests that selling activity is on the rise. As shown below, the MFI on the WIF/USD daily chart is declining and is at risk of falling below the neutral line.
Considering these conditions, WIF's price appears to have lost its upward support and may experience a prolonged decline.
WIF Price Prediction: A 20% Correction Ahead
A closer look at the daily chart suggests that WIF may struggle to break above $2.82, as it continues to follow the downward trend since July.
On July 22, WIF reached $2.82 but faced resistance. The price then declined by 55% to $1.25 by August 6. However, this does not necessarily mean that Dogwifhat will experience a similar decline.
Nevertheless, a swift rebound appears difficult. WIF could decline by 20%, as the Fibonacci retracement levels highlight potential support and resistance levels.
Read more: Top 5 Dogwifhat (WIF) Wallets to Consider in 2024
If the token reaches the 50% retracement level, it could reach $2.08. However, if the bulls defend the $2.33 support, WIF could rebound to $3.11.
