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Polkadot (DOT) Shows Bullish Signs After 55-Day Correction Comes to an End

Published
Nikola Lazic
Published
By Nikola Lazic
Edited by Ryan James

Key Takeaways

  • Descending Wedge: DOT is breaking out of a falling wedge pattern.
  • Elliott Wave Structure: A W-X-Y-Z corrective wave is likely to be completed.
  • Fibonacci Resistance: Key levels align with potential wave targets.

Polkadot (DOT) appears to be completing a corrective phase within a descending triangle structure, indicating the potential for a bullish reversal.

The higher time frame shows the asset approaching key Fibonacci levels, while the lower time frame chart suggests a new impulsive wave formation.

The following analysis breaks down DOT’s technical structure and projects future price action.

DOT Price Analysis 

Polkadot has been in a corrective phase following a strong five-wave impulsive rally that peaked at $11.6 on Dec. 4.

The correction unfolded in a complex W-X-Y-X-Z pattern, forming a descending wedge that suggests exhaustion in selling pressure.

The price stabilizes below the 0.618 Fibonacci retracement level at $6 after spiking to $5.50. 

DOT price analysis
DOTUSD likely ended correction | Credit: Nikola Lazic/TradingView

The Relative Strength Index (RSI), on the daily timeframe, rebounds from oversold conditions, hinting at potential bullish momentum.

A decisive break above the wedge’s upper boundary could confirm the end of the corrective structure and the start of a new impulsive cycle.

From a structural standpoint, the descending wedge pattern has historically been a bullish reversal signal.

The confluence of Elliott Wave completion and Fibonacci retracement levels increases the probability of an upside breakout

f DOT can reclaim the $6.31 resistance, the next levels to watch are the 0.5 Fibonacci retracement at $7.34 and the 0.382 level at $8.22, which could serve as mid-term resistance points.

DOT Price Prediction 

In the 1-hour timeframe, DOT could form a new five-wave impulsive structure after yesterday’s downward spike to $5.50.

The price has recently completed wave Z and is in the early stages of wave (i), which typically exhibits the initial breakout momentum.

DOT price prediction
DOTUSD | Credit: Nikola Lazic/TradingView

Based on Fibonacci extensions, the initial wave (iii) target lies around $8.20 (0.382 Fib). A corrective wave (iv) is expected before the final wave (v) attempts to push prices towards the $9.32 level (0.236 Fibonacci retracement), aligning with previous resistance levels.

If bullish momentum sustains, wave (v) could extend beyond $9.32, with Fibonacci projections suggesting a possible peak near $10.50.

However, failure to maintain support above $5.96 could invalidate this bullish scenario, leading to a retest of lower levels near $5.19 or even the critical $3.53 support.

RSI on the hourly chart is recovering from oversold territory, further supporting the case for an upward move.

However, confirming trend reversal will require a sustained breakout above the descending wedge structure and a higher low formation.

Key Levels to Watch

  • Immediate Resistance: $8.20 (0.382 Fibonacci extension, wave (iii) target)
  • Key Resistance: $9.32 (0.236 Fibonacci retracement, wave (v) target)
  • Major Resistance: $10.50 (Fibonacci projection peak for wave (v))
  • Immediate Support: $5.96 (critical level to sustain bullish momentum)
  • Key Support: $5.19 (potential retest level if support fails)
  • Critical Support: $3.53 (invalidates bullish scenario)
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.
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Nikola Lazic

Nikola Lazic is a cryptocurrency analyst and investor working in the industry since 2017. He holds a bachelor's degree in Sociology, which enables him to better understand the psychology behind the crowd´s positioning. Consequently his preferred analytical tool is Elliott Wave Theory in combination with price action analysis. Combining his experience in trading and investing with knowledge in content writing he strives to bring the most accurate and actionable information. Expertise: Cryptocurrencies, Technical analysis, Elliott Wave Theory, On-chain metrics, Research reports.
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