Polkadot (DOT) has experienced a prolonged downward trend in its price, but it has discovered robust and consistent support around the $6.40 mark, suggesting a potential bottoming out.
A notable upturn occurred on Wednesday and Thursday, propelling DOT’s price above both the 20-day and 200-day Simple Moving Averages (SMA).
DOT’s Resilience and Rebound:
Since reaching its yearly peak in mid-March, DOT has undergone a decline of over 40%, distancing itself significantly from its previous highs. The journey from $11.55 to $8.77 by March 19th marked a dip below the 20-day SMA. Despite a recovery to $9.14, DOT slipped to $8.43 by April 3rd, influenced by the 20-day SMA. Subsequent downturns on April 12th and 13th, amounting to 13.48% and 11.72% drops respectively, pushed the price below the 200-day SMA to $6.40, where sturdy support was found.
The bounce-back commenced, with DOT reclaiming ground above the 200-day SMA by April 22nd, reaching $7.47. Yet, encountering resistance at the 20-day SMA, DOT dipped below the 200-day SMA again to $6.73 by the following Sunday. Continuing into the current week, DOT faced declines of 2.23% on Monday and 2.43% on Tuesday, closing at $6.42. However, the formidable $6.40 support level triggered a rebound, lifting DOT by 7.48% to $6.80 on Wednesday, testing resistance at $7. Thursday’s momentum persisted as buyers propelled DOT upward by 5.65%, surpassing both the 20-day SMA and the 200-day SMA to settle at $7.29.
At present, DOT hovers around $7.17, slightly above the 200-day SMA, as market participants evaluate their positions.
Analyzing Patterns and Possibilities:
Reviewing the DOT price chart reveals intriguing patterns. Between March 15th and April 11th, a descending triangle formation implied seller dominance. However, on April 30th, DOT formed a double bottom pattern, hinting at a potential price floor. The current range for DOT lies between $7.10 and $7.20, with the 200-day SMA positioned at $7.19. A failure to sustain above the 200-day SMA might lead to a retreat to $7, with the 20-day SMA offering support. Further downward movement could target the $6.40 support level.
The path to upward price movement hinges on DOT’s ability to maintain its position above the 200-day SMA. A successful breach could propel DOT towards the $8 mark, with the 50-day SMA posing a formidable resistance.
Insights from Indicators:
Examining indicators, the MACD signals bullish sentiment, supporting the prospect of an extended price recovery. The RSI remains firmly within the neutral zone, suggesting room for further price appreciation.
Moreover, the recent decline in DOT’s price triggered the liquidation of numerous long positions, resulting in significant drops in the OI-Weighted Funding Rates. This, coupled with DOT’s price consolidation, suggests that a bottoming out may have occurred, potentially paving the way for a resurgence in DOT’s value.
