Polkadot (DOT) Attempting to Reclaim September Highs

Share Article
In Brief
  • The DOT price is likely trading inside an ascending wedge.

  • There is support and resistance at $3.80 and $6.40, respectively.

  • The price has possibly finished the B wave of an A-B-C correction.

  • promo

    Gravity Dex Protocol: Bringing DeFi to Cosmos

The Trust Project is an international consortium of news organizations building standards of transparency.

The Polkadot (DOT) price has bounced at an important support level and is aiming to break above its previous highs.

Sponsored



Sponsored

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.

Sponsored



Sponsored

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.

DOT Chart By TradingView

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.

DOT Chart By TradingView

Possible Increase

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

Source: Twitter

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.

DOT Chart By TradingView

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).

DOT Chart By TradingView

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.

DOT Chart By TradingView

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!

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
Sponsored
Share Article

Related topics

Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

Follow Author

Market signals, studies and analysis! Join our Telegram Today!

Go

Market signals, studies and analysis! Join our Telegram Today!

Go

Market signals, studies and analysis! Join our Telegram Today!

Go