Polkadot (DOT) Price Is Ready To Drop Further, Will It Drop 50%?
The price of Polkadot (DOT) has confirmed the previous long-term support area as resistance and broke down below a short-term pattern. It is likely to face strong selling pressure in the coming days.
Long-term support area
The price of Polkadot (DOT) has dropped below a descending resistance trendline since reaching its yearly high at $7.9 in February 2023. This trendline has rejected the price several times, most recently in mid-July (red arrow).
This rejection led to a sharp decline, breaking below the crucial support area at $4.2 in the week from August 28 to September 3.
After a few weeks of consolidation, the price of DOT confirmed this area as resistance last week and formed a bearish engulfing candle (yellow arrow).
The creation of a bearish engulfing candle after rejection is an extremely bearish signal. It indicates that the bears has taken full control of the market, and a further sell-off could follow.
The weekly RSI (Relative Strength Index) supports the possibility of further decline as it is below 50 and sloping downward.
The potential target for this decline is an all-time low of $2, which is 46% lower than the current price.
The 4-hour chart shows that DOT is poised for a deeper decline. This is because it has broken down below an ascending parallel channel earlier today.
This pattern has a target of $3.66, calculated by measuring the height of the pattern and projecting it downwards from the breakdown point.
Since this pattern has been in existence for 27 days, the movement after the breakout could occur swiftly.
The most likely scenario indicates that the price of DOT will continue to decline in the near future. The nearest target is $3.66, and it could go as low as $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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