Disclaimer: The findings of the following analysis are the sole opinions of the author and should not be taken as investment advice.
While some alts faced an extended retreat after September 7, Polkadot seemed a bit unruly. Against the broader market trend, the DOT started a strong rally that peaked at $ 38.4, a nearly 4-month high for the digital asset. Furthermore, their weekly earnings of 30% easily outperformed other currencies in the top 10.
Supported by a healthy chain metric and development activity, the long-term outlook was favorable for the world’s eighth largest cryptocurrency. However, in the short term, some selling pressure was beginning to creep into the market, with the focus shifting to the lower trend line.
At the time of writing, the DOT was trading at $ 36.6 after earnings fell to 1.8% in the last 24 hours.
Polkadot 4-hour chart
Since rebounding from the lows seen after September 7, the DOT price has oscillated within the bounds of an ascending channel. New highs and a new local top were secured at $ 38.8 after the DOT changed its 20 and 50 simple moving average lines to bullish. Since then, the market lost some steam as the DOT slid towards the midline of its pattern.
A close below $ 36.1 would pave the way for a fresh low of $ 34, from where a rebound can be expected. Also, an early reversal would cause the DOT to rebound from the midline and form a new top around the $ 40 mark.
On the other hand, a bearish result would cause the DOT to break below the lower trend line of its pattern. Such a move would cause the price to slide down to $ 31 or even $ 28.6.
The Relative Strength Index maintained its position within bullish territory but, at press time, was heading lower after hitting the overbought zone. This suggested that stabilization was in effect. However, this could turn into a crash if the RSI moves below equilibrium and into the bearish zone.
Meanwhile, the MACD approached a bearish crossover above its midline, a development that generally acts as a sell signal. Similarly, the Awesome Oscillator noticed two lower peaks as the upward pressure gradually decreased.
The DOT market remained vulnerable to a short-term sell-off. 24-hour trading volumes decreased 36% as buying pressure eased across the market. As a result, the price can be expected to fall towards the lower trend line of its ascending channel, one from which a reversal can be anticipated.
The aforementioned indicators were still trading above their midlines, and yet a prolonged selloff seemed unlikely. To capitalize on the DOT’s bull run, traders can bet on the alternative once it forms a new low of $ 34.1.
This is a machine translation of our English version.