DOT, the token tied to the open-source multichain blockchain Polkadot, has increased by 17% in the last 14 days. This Polkadot price increase helped the altcoin move from $3.86 to $4.68.
However, this rally appears to have pushed DOT into resistance areas where profit-taking could cool down the rally.
Will the token defy expectations and continue climbing, or is a correction close by? Let’s find out in this analysis.
Between Jan. 3 and 31, Polkadot’s price traded within a rectangular pattern. The altcoin’s value wobbled between $6.25 and $7.77 during this period.
However, as soon as February began, DOT broke down from the swing low of the abovementioned pattern. Eventually, the market value plummeted to $3.86 on March 11.
This decline kept the Polkadot token stuck in a descending triangle, which is bearish. But later, it broke out of the bearish pattern and closed in on the $5 mark.
According to CCN’s findings, the DOT price increase was due to rising buying pressure. This was evident from the Money Flow Index (MFI) reading, which now hits 81.87.
Beyond measuring buying and selling pressure, the Money Flow Index (MFI) also identifies overbought and oversold conditions. Readings below 20 imply an oversold asset, while those above 80 indicate overbought levels.
Therefore, the current MFI rating indicates that DOT is oversold. As such, Polkadot’s price might likely experience a pullback in the short term.
DOT Price Analysis: Yearly Low Possible
In line with this sentiment, the Supertrend indicator also agrees that DOT’s price might soon retrace.
The Supertrend indicator is a trend-following indicator that overlays price charts, generating clear buy and sell signals based on the asset’s price movement. When the green line of the indicator is below the price, it is a buy signal.
On the other hand, if the red line is above the price, the trend is bearish, and it is a sell signal. As seen above, Polkadot’s price is below the Supertrend, with other indicators showing it could face resistance near $5.16.
Due to this position, DOT is unlikely to break above the 0.236 Fibonacci level at $5.54. Instead, the cryptocurrency’s value might decline to below the $4 mark again. If that is the case, Polkadot’s price might slide to $3.66, representing a yearly low.
On the other hand, if buying pressure increases regardless of the overbought position, this bearish bias might not come true. DOT might break the resistance at $5.16 and 5.54 in that case and rally toward $6.70 at the 0.382 Fib level.
In a highly bullish market condition, the altcoin’s market value could soar as high as $7.64.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
