Polkadot price flashes warning signal and DOT bulls could panic
- Polkadot price inside a bearish rising wedge pattern.
- Three-box reversal would coincide with a trend line break.
- -27% drop in sight for DOT.
Polkadot price is currently trading inside one of the most bearish chart patterns in existence: the Rising Wedge. The rising wedge patterns signal extremes and overbought conditions and are progenitors of massive corrective moves or broader trend changes.
Polkadot price action warns of overdone moves, bulls could get trapped
Polkadot price is at an inflection point. The bulls remain in charge here, but the threat to the downside is substantial and could trap a good number of bulls. If Polkadot moves down to $36.50, that will initiate a new column of Os and a three-box reversal.
The three-box reversal coincides with a break of the lower trending line in the rising wedge. Utilizing the vertical profit target method in Point and Figure charting, the target zone for bears would be the $27.00 value area. The move could likely extend lower, but support against the dominant bull market trendline should be expected the closer Polkadot price gets to the $27.00 level.
DOT/USD $0.50/3-box reversal Point and Figure chart
Bears may have to wait a while, however. If Polkadot price moves up to $40.50, then it will enter into price discovery mode. In other words, Polkadot will probably visit its prior all-time highs and then push on to make new all-time highs. As bearish as the rising wedge pattern is, its ability to cause a substantial blow-off top move has a high probability, especially if an instrument is trading at - or near all-time highs.
In the event of a breakdown below the rising wedge, bears will want to monitor the break carefully and watch for a retest to confirm an honest move.
Author
Jonathan Morgan
Independent Analyst
Jonathan has been working as an Independent future, forex, and cryptocurrency trader and analyst for 8 years. He also has been writing for the past 5 years.
