• Polkadot price closing in on a breakout from a bear flag pattern.
  • A decline to the DOT measured move target would erase the majority of the 2021 gains.
  • The 78.6% Fibonacci retracement level at $11.96 may prevent a significant decline.

Polkadot price executed a timid rebound off the June 22 low, traversing a bear flag pattern marked by no end of the day commitment and well below-average volume. Today’s decline may force a breakout from the pattern, putting DOT on course to record a 40% move from the flag’s lower trend line.

Polkadot price structure indicates the ground floor is still far away

Polkadot price recorded one of the largest 2Q declines at 56%, shredding the support offered by the 200-day simple moving average (SMA) and most key Fibonacci retracement levels. The DOT response to the second quarter collapse was a corrective rebound of 40%, illustrating a bear flag pattern on multiple timeframes.

The measured move of the bear flag pattern is approximately 40%, presenting a Polkadot price target of $8.85. A decline of that magnitude would overwhelm the layers of support provided by the May 23 low of $13.59, the June 22 low of $12.75 and the 78.6% retracement level of the rally beginning in August 2020 at $11.96. In fact, the drop would nearly eliminate all the gains achieved by DOT in 2021, representing a major setback for the cryptocurrency.

If Polkadot price registers a daily close below the flag’s lower trend line, currently at $14.70, it will have an inevitable bearish outcome for DOT. A spike in volume should accompany the breakout, further confirming the bearish forecast.

Adding some validity to a projection of a 40% decline is that Polkadot price recently plunged by a similar percentage between July 19 and July 22 after a breakout from a symmetrical triangle pattern. Thus, the precedent is in place for another DOT sell-off.

DOT/USD daily chart

DOT/USD daily chart

A daily close above the flag’s upper trendline, currently at $17.90, would negate the bearish forecast and suggest that Polkadot price seeks at least a test of the declining 50-day SMA at $20.24. Any further DOT upside will be challenged by the downward pressure of the moving average and the recent bearish Death Cross pattern triggered on June 27. 

To be sure, Polkadot price has established the precedent of sharp, outsized declines since the top on May 15, and it should not be ignored. Hence, market operators have nothing to lose by being patient until the bear flag pattern resolves and reaches the ground floor. Of course, they could be stubborn and stand in the way of another 40% downturn.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Cardano partners with Chainlink to drive smart contract development for DeFi applications

Cardano recently announced a strategic partnership with decentralized blockchain oracle network Chainlink. The third-generation blockchain is preparing to build smart contracts for decentralized finance (DeFi) applications.

More Cardano news

Huobi to stop servicing Chinese users as China vows strict crackdown on crypto

A few months after the cryptocurrency mining ban in China, the country issued another update last week, reiterating that digital assets are banned and crypto exchanges are prohibited. Shortly after the announcement was revealed, Bitcoin and altcoins plunged.

More Cryptocurrencies news

Ethereum bears contemplate a drop to $2450

ETH price is building up downside pressure while clinging to the 200-SMA support. RSI remains flat below the midline, keeping the sellers cheerful. A drop towards $2450 remains in the offing if the 200-SMA caves in.

More Ethereum News

Polkadot price at make-or-break point

Polkadot price spots a potential symmetric triangle pattern on the 1D chart. RSI stands neutral at 50.00, suggesting a lack of clear directional bias. 21-DMA offers immediate resistance.

More Polkadot News


Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast