Polkadot Tests Critical Resistance: Will DOT Succeed in Breaking Out Attempt
Date: 2023-07-06 Author: Karina Ziganova Categories: IN WORLD
The price of Polkadot rose after the end of the bullish pattern on June 12. DOT is currently trading just below the critical diagonal resistance level
Although the long-term indicators do not yet confirm the reversal, technical analysis of the short-term timeframe signals that the asset has started a new bullish trend that will continue for a significant time.
The price of Polkadot has formed a double bottom
The price of Polkadot fell below the descending resistance line in May 2022 and has repeatedly deviated from it (the last deviation is marked with a red icon on the chart). This accelerated the pace of decline and led to a new low of $4.20 in June 2023.
However, after that, the price of DOT recovered and two weeks later formed a bullish candle with a reversal, which negated all the decline of the previous period.
In addition, a double bottom pattern appeared on the chart (it is marked with two green icons on the chart), which is usually considered a bullish sign.
Currently, Polkadot is again approaching the resistance line, which is at $5.70.
Analysis of the weekly RSI does not provide clear indications as to the direction of the trend. Despite the recent increase, the indicator's value is still below 50, indicating an uncertain trend.
Should we expect a bullish DOT reversal?
Technical analysis of the daily timeframe gives a much more positive outlook. The reasons for this lie in the price action, the wave chart, and the readings of the indicators.
First, the price of DOT returned to the horizontal area of $5.20, which previously acted as support. Consolidating above it will confirm the reversal and could lead to an increase to $6.50.
Secondly, the wave chart shows that Polkadot has completed the A-B-C correction structure (it is marked in black on the chart). This confirms the possibility that the minimum has already been reached and is in line with the previously mentioned long-term double bottom model.
Finally, the daily RSI is rising and above 50, which is also a sign of a bullish trend.
However, a close below $5.20 would mean that the short-term trend remains bearish. While this doesn't invalidate the long-term positive outlook, the price of DOT could still correct to $4.60.
