The Breakdown of Polkadot (DOT) Price Signals Bearish Outlook
As a crypto reader, you should be aware that the Polkadot (DOT) price has recently broken down from a 250-day horizontal support area, resulting in the lowest daily close since November 2020. This indicates a bearish trend that is likely to continue towards new lows.
Technical Analysis: Descending Triangle Pattern and Resistance
Examining the daily timeframe, we can observe that the DOT price has fallen below a descending resistance line since February 19. Additionally, it has found support at the $4.30 horizontal support area, creating a descending triangle pattern, which is generally considered bearish.
On September 1, the DOT price broke and closed below the $4.30 support area, which had been in place for 246 days. This resulted in the lowest daily close of $4.21 since November 2020, confirming the $4.30 area as resistance.
Although the price has not accelerated its rate of decrease yet, there is a possibility of a bullish trend reversal indicated by the daily RSI, which is a momentum indicator used by market traders. A reading above 50 and an upward trend suggest a bullish advantage, while a reading below 50 implies the opposite. The RSI has shown significant bullish divergence. However, reclaiming the $4.30 area is necessary to confirm the divergence and initiate a trend reversal.
Implications of Confirmed Breakdown in the Weekly Timeframe
If the breakdown is confirmed in the weekly timeframe, the DOT price could potentially drop to $1, breaking the all-time low support region of $2. Before reaching this target, there is a possibility of a bounce at the $2 region, as it represents the all-time low support and is created by the 1.61 external Fib retracement level of the recent upward movement.
The weekly RSI supports the continuation of the decrease, as it is currently below 50 and falling, indicating a bearish trend. However, it is important to note that a breakout from the long-term descending resistance line would invalidate the ongoing drop and could lead to a 75% upward movement towards the $7.40 resistance area.
Hot Take: Stay Informed and Cautious in the Volatile Crypto Market
As a crypto reader, it is crucial to stay informed and cautious in the volatile market. The breakdown of Polkadot (DOT) price and the bearish outlook highlight the importance of analyzing technical indicators and patterns to make informed investment decisions. Keep an eye on the resistance levels and potential trend reversals to identify potential opportunities or risks. Remember, the crypto market can be unpredictable, so always exercise caution and stay updated with the latest developments.
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