The Polkadot (DOT) Price Breaks Down from Critical Support Level
The Polkadot (DOT) price has recently broken down from a crucial horizontal support level at $4.40, resulting in its lowest weekly close since 2020. Although the price is currently trading within a short-term corrective pattern, this does not negate the long-term bearish structure.
Polkadot Price Approaches All-Time Low
Technical analysis on the weekly timeframe reveals that DOT has fallen below a descending resistance line since reaching its yearly high of $7.90 in February 2023. Additionally, the price has broken down from the $4.40 horizontal support area, which has been in place since the beginning of the year. This breakdown, coupled with the support area, forms a descending triangle, a bearish pattern that further validates the downward move.
If the decline continues, the DOT price could potentially drop by another 50% and reach the $2 horizontal support area, which is based on the all-time lows from August 2020. Conversely, reclaiming the $4.40 area and the descending resistance line may trigger an 85% price increase to the $7.50 resistance area.
RSI Indicates Bearish Momentum
The Relative Strength Index (RSI), a momentum indicator, is currently bearish, supporting the ongoing decrease in the DOT price. Readings below 50 and a downward trend suggest a bearish trend, indicating that sellers have the upper hand.
DOT Price Prediction: Can a Reversal Occur?
Analysis on the six-hour timeframe reveals that the recent decline in the DOT price has been contained within a descending parallel channel, which typically indicates corrective movements. However, this contradicts the breakdown from the long-term support, which should lead to a significant price decrease.
The RSI has recently moved outside of its oversold territory, which has previously resulted in an 11% increase in the DOT price when it was trading at the channel’s support line. If the same pattern occurs this time, the channel’s resistance line could be reached at around $4.30, representing a 9% increase from the current price.
Despite the potential increase, the long-term trend will not be considered bullish until DOT breaks out from the channel. Conversely, a breakdown from the channel could accelerate the decline towards the $2 support level mentioned earlier.
Hot Take: Polkadot Price Faces Bearish Pressure
The Polkadot (DOT) price is currently facing significant bearish pressure as it breaks down from a critical horizontal support level. The long-term bearish structure is still intact, despite the short-term corrective pattern. Technical analysis indicates that the price has fallen below a descending resistance line and a bearish descending triangle pattern has formed. This breakdown suggests the possibility of further downside and a potential decline to the $2 support area. Reclaiming the $4.40 area and the descending resistance line could trigger a substantial price increase. The Relative Strength Index (RSI) is currently bearish, supporting the ongoing decrease. In the short term, the price is contained within a descending parallel channel, but a breakout is required for a bullish trend reversal.
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