The price of Polkadot (DOT) has broken below an important dynamic support line, and it is likely to retest the yearly low in May.
Weekly outlook
After hitting a yearly low of $4.22 in December 2022, the DOT price bounced back and broke above the 20-week moving average, which is commonly used to determine the long-term trend.
This momentum helped the price test the resistance zone of $7.6 before being rejected in the week of March 20-27. Although the price flipped the 20-week moving average as support for the next eight weeks, it broke below this line last week. This is a significant bearish development, indicating that the bears has taken over the market.
If the DOT price continues to stay below the 20-week moving average this week, the downward trend is likely to continue. In that case, it could drop to the yearly low of $4.2, marking a decrease of over 20% from the current level.
The weekly RSI indicator supports this possibility as it was rejected at the 50 level and is trending downward.
Ascending support line broken
The daily chart shows that the DOT price has broken below an ascending support line, which was formed from the yearly low. Since this line encompasses the entire uptrend, the breakdown suggests that the upward movement has ended.
Additionally, the price has also broken below the important horizontal support zone at $5.8, indicating the continuation of the downtrend.
Therefore, the DOT price is likely to continue to decline to $5.2 in the next few days.
Conclusion
The most probable outlook suggests that the DOT price will continue to decline in May. The nearest target is found at $5.2, while the next target is at $4.2.
This view will be invalidated if the price reclaims the 20-week moving average at $6.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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