Dogecoin (CRYPTO: DOGE) pulled back on Wednesday, although an analyst highlighted a bullish technical pattern suggesting strong upside ahead.

What's Behind The Dip?

The dog-themed memecoin slipped over 3%, with trading volume dropping 9.60% over the last 24 hours. Dogecoin’s decline was steeper compared to other large-cap coins, such as Ethereum (CRYPTO: ETH), XRP (CRYPTO: XRP) and Solana (CRYPTO: SOL).

The losses coincided with yet another delay in discussing the cryptocurrency market structure legislation, which seeks to establish a federal regulatory framework for digital assets.

The spot market drop impacted the derivatives market, as open interest in DOGE futures fell 1.79% in the last 24 hours, according to Coinglass.

DOGE To Bounce Back?

Ali Martinez, a widely followed cryptocurrency analyst and trader, spotted an inverse head and shoulders pattern on Dogecoin’s daily chart.

Typically, technical analysts interpret this formation as a sign of a potential reversal from a downward trajectory. The neckline serves as a resistance level that the price must break through to confirm the pattern.

In this case, the neckline is at $0.152, with Martinez projecting a target of $0.186 upon breakout, representing a potential 30% upside.

What Are Technicals Suggesting?

The Moving Average Convergence Divergence indicator, which compares two exponential moving averages of an asset's price,  typically the 12-period and the 26-period, flashed a "Buy" signal for DOGE, according to TradingView. 

Meanwhile, the Bull Bear Power indicator, which measures the strength of buyers and sellers, showed a "Neutral" reading, while the Relative Strength Index also indicated a balance between the bulls and the bears.

Price Action: At the time of writing, DOGE was exchanging hands at $0.1437, down 3.09% in the last 24 hours, according to data from Benzinga Pro. Year-to-date, the coin has gained 22%.

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