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Polkadot Price Bounce Saves 146-Day Support Area, Bullish DOT Pattern Predicts Further Growth

Last Updated May 2, 2024 1:59 PM
Valdrin Tahiri
Last Updated May 2, 2024 1:59 PM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Polkadot trades above a 146-day horizontal support area at $6.40 and a Fibonacci support at $6.73.
  • After crating a double bottom pattern, DOT broke out from a descending resistance trend line.
  • Will the price increase mark the end of the correction or is it just a temporary relief rally?

The DOT price has fallen over 40% since its yearly high on March 14. However, there is a short-term bounce ongoing since April 13. Due to the creation of a bullish pattern and breakout from a short-term resistance, it is possible that DOT is in the first stages of its recovery.

Despite the ongoing short-term rebound, uncertainty lingers regarding whether the long-term trajectory has shifted to bullish or if this is merely a segment of a broader corrective phase.

DOT Creates Bullish Pattern Inside Support

The DOT price has fallen since reaching a yearly high of $11.89 on March 14. The decrease led to a low of $5.69 on April 13, a decrease of over 50% in only a month. The decrease supposedly caused a breakdown below the $6.40 horizontal support area, which has existed since December 2023.

However, DOT  bounced and created a long lower wick (green icon), reclaiming the horizontal support area. Then, it created a double bottom pattern on April 30 and moved above the 0.618 Fibonacci retracement support level of $6.73. DOT has reclaimed a horizontal and Fibonacci support level and then created a bullish pattern.

DOT Price Creates Double Bottom
DOT/USDT Daily Chart | Credit: TradingView

Finally, DOT also broke out from a descending resistance trend line existing since the yearly high. This is another sign that the correction is over.

On top of the bullish price action, the daily RSI and MACD have both generated bullish divergences (green). The divergences further add to the bullish sentiment and support the start of a notable rebound.

If the increase continues, the next resistance area will be at $9.

DOT Price Prediction: What About the Long-Term Movement?

While the daily time frame readings support the likelihood of a bounce, the weekly time frame chart is not as resolute. The price action shows that the most important level is at $7, a horizontal area that has acted as either support or resistance since July 2021.

While DOT has seemingly bounced above it, it needs to reach a weekly close to confirm the retest. If the DOT price holds this level until the end of the week, it will create a bullish hammer candlestick (green icon).

DOT Long-Term Movement
DOT/USDT Weekly Chart | Credit: TradingView

Technical indicators do not give any guidance in determining the trend’s direction. Both the RSI and MACD are falling, and while the RSI is still at 50, the MACD has made a bearish cross (red icon).

If the bullish outlook from the six-hour chart transpires, DOT will increase to the long-term resistance at $10. However, a weekly close below $7 will invalidate this possibility and can cause a drop to $4.40.

Short-Term Bullish Pattern Can Lead to Long-Term Increase

To conclude, while the weekly time frame chart is unclear, the short-term price action and indicator readings support a bounce. If the bullish scenario unfolds, DOT can reach the minor resistance at $9 and possibly increase until it reaches the long-term one at $10.

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