Polkadot’s track record has looked solid on the charts – its price has hit new local highs each week and has provided 52% monthly returns to its investors. Major resistance barriers have been broken down at $ 17 and $ 19.5, pointing to a further upside in the coming days. However, there were some short-term risks in the market. Several divergences were detected in its indicators and a widening wedge pattern threatened an incoming sell-off.
Polkadot 4-hour chart
As a result of the upward pressure, Polkadot consistently closed above its daily 20-SMA (not shown) for two weeks. In the 4 hour time frame, this correlated with higher highs and lows. At press time, the DOT was looking to form a new high possibly above the $ 23 mark, but this did not overshadow some bearish signals in the market.
The 50-SMA (yellow) showed that the DOT uptrend lost some momentum as prices began to converge towards the mid-term average line. In fact, the bulls had to defend this moving average from a collapse on two occasions, when the DOT formed lower highs at $ 18.7 and $ 20.3, but it seemed only a matter of time until the lead was given up to bassists.
There were also some concerns due to a rising wedge pattern, a setup that generally triggers a market pullback. Based on the highs and lows of the pattern, the 17% retracement was on the table if the DOT broke below the lower trend line.
While the DOT moved on an upward trajectory, the RSI formed three lower peaks and indicated a bearish divergence. A new low formed below 45 would provide confirmation of an incoming decline. This divergence was also evident in the Squeeze Momentum indicator, which suggested that buyers were gradually losing steam. Finally, the DMI saw multiple crossovers in recent weeks as a clear uptrend has failed to solidify.
The next few hours could see the DOT form a higher peak at the $ 23 mark, but this was in line with its growing wedge pattern. Prices were expected to move south and towards the lower trend line, from where a 17% retracement was possible. To deny this thesis, the bulls had to target a close above the June 10 DOT high of $ 24.5.
This is a machine translation of our English version.
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