Polkadot (DOT) Double Bottom Pattern Hints at Possible Price Push to $5
Analyzing DOT's Bullish Pattern | Credit: Hameem Sarwar
Key Takeaways
- Polkadot (DOT) has reached the final support before its all-time low.
- DOT has created a short-term double-bottom pattern since Aug. 5.
- Will DOT confirm this pattern and break out, or will it fail to do so?
Polkadot (DOT) started 2024 on a bullish note, reaching a new yearly high of $11.89 on March 14, an increase of 45% since the start of the year. However, it has been mired in a lengthy downward trend since, which nearly led to a new all-time low on Aug. 5.
Despite creating a higher low in September, DOT trades nearly 50% below its yearly open.
Can Polkadot build on its higher low and create a bullish structure, or will it break down from its support area, triggering a decline to a new all-time low? Let’s find out.
Polkadot Price Returns to Support
The weekly time frame shows that the price of DOT has fallen inside a descending parallel channel since the yearly high of $11.89 in March.
The decline led to a low of $3.59 in August, validating the $3.90 horizontal area as support. This is the final support area before the all-time low of $2.69.
Since then, DOT has bounced at the channel’s support trend line (white icon) and created a higher low.
Despite the bounce, the weekly Relative Strength Index (RSI) and MACD are still bearish. Both are trending downward, the RSI is below 50 and the MACD is below 0.
So, the Polkadot price action and indicator readings give mixed signs. While the price action shows a corrective movement just above long-term support, technical indicators still show a bearish trend.
DOT’s Double Bottom Pattern
While the weekly time frame gives mixed readings, the daily time frame is bullish. It shows a double bottom pattern (green) inside the aforementioned $3.90 horizontal support area.
On top of being a bullish pattern, the double bottom is combined with bullish divergences in the daily RSI and MACD, increasing its legitimacy.
As a result of the double bottom, the DOT price is likely to reach the channel’s resistance trend line at $5.
However, since the pattern only exists in the short-term, it cannot be used to determine if DOT will break out from the long-term channel.
Whether it does or not will likely determine the long-term trend’s direction.
Relief Rally Soon?
The weekly time frame for DOT does not give a clear direction for the future trend, since the price action and indicator readings do not align. However, the shorter-term daily time frame is more bullish, predicting an increase toward at least $5.
