Key Takeaways
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.
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.
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.
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.
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.