Polkadot (DOT) price has held onto an important horizontal support area. It has the potential to recover in the coming days.
Daily Outlook
The price of Polkadot (DOT) has been rising along with an ascending support line since reaching a yearly low at $4.2 in December 2022.
The price bounced off this line on March 10th (green arrow), but the subsequent rally couldn’t push the DOT price to a new yearly high. Instead, it was rejected by the 0.618 Fibonacci retracement level of the previous decline. This is a sign of weakness, indicating a lack of buying pressure at higher levels.
Indeed, DOT price continued to decline and broke below the support line and the horizontal support zone at $5.8 on May 1st, marking the end of the uptrend.
However, the downward momentum seems to have stalled at the horizontal support level of $5.2, with the formation of bullish pin bar candles. This is a sign of buying pressure.
The RSI indicator has approached oversold territory, which has historically led to recoveries.
Therefore, there is a possibility that the DOT price will retest the $5.8 region before continuing its downward movement.
Descending Parallel Channel
The 4-hour chart shows that DOT price has been trading within a descending parallel channel since breaking below the $5.8 horizontal zone. This is a bullish pattern that often leads to breakouts in most cases.
Furthermore, DOT price has formed a higher low after bouncing off the $5.2 support level.
Therefore, there is a possibility that it will break above the current pattern and move towards the $5.8 region, as mentioned above.
Conclusion
The most likely scenario suggests that the DOT price will bounce off the $5.2 support zone and retest the $5.8 region.
This viewpoint will be invalidated if the $5.2 level is broken. In that case, the DOT price could decline to the yearly low at $4.2.
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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