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Did Polkadot’s Partnership With Cardano Fuel DOT Price Increase?

3 mins
Updated by Geraint Price
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In Brief

  • The Polkadot (DOT) price has risen considerably during the past four weeks, reaching a high of $5.05 on Nov. 7.
  • The weekly Relative Strength Index (RSI) and Elliott Wave count are both bullish, supporting the upward movement.
  • Despite this positive Polkadot price prediction, a weekly close below $4.40 will invalidate the bullish Elliott Wave count.
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The Polkadot (DOT) team has announced a partnership with Cardano to use Substrate, which led to the DOT price breaking out from a descending resistance trend line and reclaiming the $4.30 horizontal area.

The weekly time frame technical analysis shows that the DOT price had fallen under a descending resistance trend line since February. The decrease led to a low of $3.56 in October.

Polkadot Reclaims Long-Term Support

Additionally, the downward movement caused a breakdown from the $4.40 horizontal support area. This was a critical development since the area had previously provided support since the start of the year.

However, the DOT price has increased during the past four weeks. Last week, it broke out from the descending resistance trend line and reclaimed the $4.40 horizontal area. This indicates that the previous breakdown was only a deviation.

Read More: What Is Polkadot (DOT)?

Traders utilize the Relative Strength Index (RSI) as a momentum indicator to assess whether a market is overbought or oversold and whether to accumulate or sell an asset.

If the RSI reading is above 50 and the trend is upward, bulls still have an advantage. The opposite is true if the reading is below 50.

The RSI is increasing and is above 50, both considered signs of a bullish trend.

DOT/USDT Weekly Chart
DOT/USDT Weekly Chart. Source: TradingView

On Nov. 6, Cardano announced that it would use Substrate to build its partner chain project. Substrate is the foundation of the Polkadot Software Development Kit (SDK).

Cardano’s founder Charles Hoskinson, has previously been complimentary about Polkadot and a possible partnership, suggesting that it is “What Ethereum 2.0 should have been.”

DOT Price Prediction: Is This Beginning of Reversal?

Technical analysts employ the Elliott Wave theory to identify recurring long-term price patterns and investor psychology, which helps them determine the direction of a trend.

The most likely Elliott wave count suggests that the price completed a five-wave downward movement (white), starting with its all-time high in November.

If so, the Polkadot price has begun a new movement in the other direction. While it is uncertain if the increase is the beginning of a new bullish trend reversal or an upwards correction, both would lead to a considerable increase.

The bullish divergence that has developed in the weekly RSI since the start of the year also supports the ongoing upward movement. Such bullish divergence typically occurs at trend bottoms and precedes bullish trend reversals.

Read More: How To Stake Polkadot (DOT)

The fact that it was combined with the reclaim of the $4.40 area and the end of a five-wave upward movement increases its importance.

Cryptocurrency trader on X (formerly Twitter) are also bullish. NebraskanGooner believes that the price will soon go on a moon mission. RektCapital also gave a bullish prediction, stating that:

Soon going to challenge the blue diagonal resistance for a breakout attempt from this major triangle (blue)

If the upward movement continues, the next resistance will be at $10, 115% above the current price.

DOT/USDT Weekly Chart
DOT/USDT Weekly Chart. Source: TradingView

Despite this bullish DOT price prediction, a weekly close below the $4.40 horizontal area will negate the bullish trend reversal. In that case, the price could fall to its yearly low at $3.56, a drop of 25% measuring from the current price.

Read More: 9 Best AI Crypto Trading Bots to Maximize Your Profits

For BeInCrypto’s latest crypto market analysis, click here.

Top crypto platforms in the US | February 2024

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona 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. (I do not have a discord and will not contact you first there. Beware of scammers)
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