Polkadot (DOT) Price Bounces From Critical Support, Has It Bottomed?
The price of Polkadot (DOT) has rebounded from a significant support area and broken above a short-term range. However, it may only recover slightly or consolidate over the next few days.
The price of Polkadot (DOT) has been decreasing since hitting a yearly high of $7.9 in February 2023. During this period, the price dropped to the support zone at $4.2 in early June and then rebounded.
This rebound has formed a morning star pattern (green ellipse) and a double bottom pattern when compared to the low created in December 2022.
Both of these patterns are bullish patterns and often lead to a reversal of the trend to the upside. They hold more significance when appearing on the weekly timeframe.
However, instead of initiating a strong upward trend in the following weeks, the price of DOT was rejected by the horizontal resistance at $5.7 in early July (red arrow). This is a bearish signal, indicating a lack of buying pressure at higher levels. Subsequently, the price dropped to the $4.2 support zone and confirmed it as support once again (green arrow).
There is a small positive sign that the weekly RSI has bounced off the bullish divergence. Additionally, the previous week’s candle had a long lower wick, a sign of buying pressure.
Considering the above, the DOT price is likely to experience a slight bounce before breaking below the $4,2 zone.
On the upside, the $5.7 zone will provide strong resistance when approached. Breaking below $4.2 will likely result in a rapid decline to the next significant support area at $3.6.
Short-Term Consolidation Range
The daily chart indicates that a minor recovery could take place in the next few days. This is because the DOT price broke out above the matching range of $4.3 to $4.57 yesterday.
The breakout candle is a bullish candle with a long lower wick, confirming that the bulls are controlling the price action in the short term.
The potential target for this recovery is $5, formed by the horizontal resistance and the descending long-term resistance line.
Technical signals suggest that the price of DOT could recover to $5 and potentially higher to $5.7 in the next few days. Thereafter, it is likely to continue falling and break below the $4,2 zone.
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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