The Polkadot (DOT) price has taken a sharp dive lately, largely influenced by heavy selling pressure around the 200-day SMA and 20-day SMA, pushing it towards the lower boundary of its trading range.
If sellers succeed in breaching this lower boundary, it could extend the bearish trend in the foreseeable future, a scenario investors need to approach with caution.
Polkadot (DOT) Shows Continued Decline Reviewing the Polkadot (DOT) price chart, we initially noticed a bullish trend early in the month, driving the price up to $7.27 and positioning it above both the 20 and 200-day SMAs. However, consistent rejections at this level caused the price to dip below the 200-day SMA on May 6. Another decline on May 7 brought the DOT price down to $6.99, where the 20-day SMA offered support. Despite a brief recovery that lifted DOT back above $7, bearish sentiment led to a 4.43% drop on May 10, pushing it below the 20-day SMA.
While DOT’s sideways movement hinted at ongoing consolidation, the recent decline on May 10 signaled a strengthening bearish sentiment. Following this drop, DOT remained in the red on May 11 and 12, settling at $6.62. The current week commenced with volatility, with DOT hitting a low of $6.41 before rebounding to $6.67. Tuesday witnessed a notable decline as sellers tested DOT’s support level but failed to push the price further down. In the ongoing session, DOT has bounced back from this support level, with buyers reentering the market. Currently, the price has risen by 1.70% and stands at $6.59.
Looking Forward Analyzing the chart, we identify strong support for DOT at $6.40, a level where the price has shown resilience during the ongoing session. The 20-day SMA currently acts as resistance at the $6.90 level. Despite being stuck between $6.40 and $7 for over a week, there’s still potential for a significant bullish move. A break past the 20-day SMA could propel the price to the $7.50 mark, hinting at a possible recovery.
However, if sellers manage to push the price below DOT’s current support levels, it might trigger a cascading effect, potentially driving the price down to $6 or even $5.5.
