beincrypto.com
The Polkadot (DOT) price trades slightly above a long-term horizontal support area at $4.30. The area has been in place for 1,100 days.
Whether the price bounces at this area and begins an upward movement or breaks down instead can help determine the future trend’s direction.
Polkadot Price Hovers Above Long-Term Support
The technical analysis for the weekly timeframe shows that the DOT price is trading above the $4.30 horizontal support area. This is a critical area since it has existed for 1,100 days. Due to the length of time the area has provided support, it is crucial that the price stays above it for the trend to remain bullish.
If the price bounces, the next resistance will be at $7.70. The area is 74% above the current price. On the other hand, a breakdown can lead to a 53% drop to the next closest support at $2, which also coincides with the all-time lows.
Crypto investing, simplified. Get DOT price predictions here.
The weekly RSI presents an ambiguous reading. Traders employ the RSI as a momentum indicator to recognize overbought or oversold scenarios, aiding in decisions to accumulate or sell an asset. Readings above 50 in an upward trend signify bullish dominance, while those below 50 imply the reverse.
Although the indicator registers below 50, it has exhibited bullish divergence (depicted by the green line). This scenario involves heightened momentum and a price decline, often leading to an upward movement. Given these conflicting signals, the RSI on the weekly timeframe doesn’t validate the current Polkadot trend.
DOT Price Prediction: Will Bearish Pattern Cause Breakdown?
Unlike the weekly timeframe, the daily one provides a bearish outlook. The main reason is that the price has traded inside a descending triangle since the beginning of the year. The descending triangle is considered a bearish pattern, meaning it usually leads to breakdowns.
In this triangle, the $4.30 area is the support, while there has been a descending resistance line since February.
Additionally, the daily RSI provides a bearish sentiment. The indicator was just rejected from the 50 line (red icon), a sign of a bearish trend. When combined with the triangle, this suggests that the price is expected to break down. If that happens, a 53% drop to the previously outlined support at $2 will be likely.
Check Out the Best Upcoming Airdrops in 2023
Despite this bearish DOT price prediction, a breakout from the triangle’s resistance line will mean that the trend is still bullish. In that case, an increase to the $7.70 resistance could be on the cards.