After several months of sluggish price action and horizontal consolidation, Dogecoin (DOGE) may finally be on the verge of a significant breakout. Recent price volatility, technical signals, and broader macroeconomic trends seem to be converging favorably for DOGE.

The technical breakthrough from the descending channel

According to the analysis, Dogecoin has officially exited the descending channel, a pattern that has restricted price increases since the beginning of the year. This breakout is further confirmed by successfully retesting the previous resistance level, which has now turned into support, indicating an ongoing bullish reversal.

Immediate resistance is at $0.27, but ongoing bullish pressure could push DOGE to $0.39 and even $0.43 in the coming weeks. Meanwhile, support around $0.17 provides a safety net in case of a short-term pullback.

Short-term price action and Elliott wave analysis

Recent price behavior indicates that Dogecoin is in a micro-adjustment phase, currently holding above the key support area between $0.17 and $0.1777. This area was previously identified as a micro support level and the market has reacted accordingly, implying that the fifth wave in the Elliott wave sequence may be starting.

Among the current wave counts, analysts identify a potential three-wave upward move, with Wave 3 peaking near the 138% Fibonacci extension at $0.196. If this structure holds, Wave 5 could extend to the 161.8% level at $0.206 or the 178.6% level at $0.213. A confirmed breakout above $0.185 would mean that the next bullish phase is underway.

However, a decisive drop below $0.17 would cause a temporary delay in the expected bullish phase. Currently, the pullback appears to be corrective and shallow, consistent with the ongoing uptrend.

Macro trend: Correlation between Bitcoin, global M2, and Dogecoin

Beyond the charts, macroeconomic indicators are fueling the bullish case. An emerging narrative attracting analysts' attention is the correlation between cryptocurrency prices and global M2 money supply — a measure of the world's money supply that includes cash, checks, and money that can easily be converted.

According to a user, when applying a 110-day smoothing level, there appears to be a consistent pattern between M2 price increases and DOGE — excluding unusual events like the post-election surge of Trump.

If money continues to flow into assets like Dogecoin as global liquidity increases, especially in the summer, this correlation may become even clearer - reinforcing the bullish technical trend.