Polkadot (DOT) Attempting to Reclaim September Highs

Failure to break out above the current resistance area could once again trigger a rapid drop towards the $3 level.

Polkadot Trading Range

The DOT price has been decreasing since it reached a high of $6.86 on Sept 1. The decrease culminated with a low of $3.53 on Sept 5, and the price has been moving upwards since. The bounce-back has taken the shape of an ascending wedge, which is normally considered a bearish reversal pattern. However, the resistance line of the wedge has not been validated enough times in order to be confirmed. The closest support and resistance levels are found at $3.80 and $6.40, respectively.

The shorter-term chart reveals another shorter-term range between $4.10 and $4.90. At the time of press, the price had broken out above the $4.90 area and validated it as support. As long as DOT does not fall back inside this range, the most likely possibility would be an upward continuation.

Possible Increase

Cryptocurrency trader @TheCryptoDog outlined a DOT chart stating that the price will increase towards its previous $6.80 highs.

Technical indicators are bullish. The MACD has been increasing and has crossed into positive territory. The Stochastic RSI has made a bullish cross and is increasing alongside the RSI. Therefore, as long as the price does not break down from this wedge or falls below the $4.90 minor support level, DOT is expected to increase towards the $6.40-$6.80 range.

Wave Count

Beginning on Aug 18, the price has likely completed a bullish five-wave impulsive formation (in black below), which ended with a high of $6.86 on Sept 1. Since then, the price has either completed an A-B-C correction (red) at the 0.618 Fib level of the entire downward move or is still in the B wave of an A-B-C correction (black).

A closer look supports the second possibility, in which the price has just completed the B wave of an A-B-C correction. If so, the C wave could take the price towards the $3.40-$2.15 range. The main reason to support this theory is that the increase since the Sept 5 low looks corrective rather than impulsive. The fact that the A and C sub-waves (red) have a 1:1 ratio suggests that it is possible that the price has reached its high. A breakout above the 0.618 Fib of the entire decrease at $5.59 would likely invalidate this scenario.

To conclude, the future direction for the DOT movement is not clear due to conflicting signals from technical indicators and wave counts. A breakout above and validation as support of the $5.60 area would suggest that the bullish possibility is more likely, while a decrease below $4.90 would support a bearish scenario. For BeInCrypto’s latest Bitcoin (BTC) analysis, click here!