Polkadot Price Forecast: DOT confirms trend reversal, eyes retest of $5 after reclaiming key hurdle
- Polkadot price trades inside a tight range above a critical support level of $3.98.
- The daily RSI produced a higher high, signaling a surge in bullish momentum and a potential breakout scenario.
- DOT needs to overcome the $4.31 hurdle to attempt a retest of $4.80 and higher levels.
- A daily candlestick close below $3.98 will invalidate the upward reversal thesis and could trigger a 7% crash to $3.70.
Polkadot (DOT) price seems to be ending its downtrend after shedding 92.91% in the last two years from its all-time high of $55.09. In the last three days, DOT has inflated by 3.3%, breaching a declining trendline and confirming the potential start of an uptrend.
Also read: Polkadot Chinese community to cease operations, cites disapproval of funding
Polkadot price coils up
Polkadot price is down 92.91% from its all-time high and currently trades in a tight range. The three lower highs and equal lows on the daily chart have created a descending triangle setup. Descending triangles, when formed after a rally or at the top of a trend, could result in a downtrend upon breakout. But since DOT is down 92.91% from its all-time high, the chances of a downward breakout are less.
Despite the bearishness of this technical formation, a closer look at the momentum indicator suggests otherwise.
The Relative Strength Index (RSI), which produced a series of lower highs since mid-July, has produced a higher high, breaching a declining trend line. The Awesome Oscillator (AO), has consistently produced higher lows since late August, indicating waning bearish momentum.
In the last three days, however, Polkadot price has breached the descending triangle's upper trend line and rallied 3.3%. This move now faces $4.20 and $4.31 hurdles. If the bullish momentum supports this move, then a reclaim of the said resistance levels would open the path for DOT to trigger an 11% rally to $4.80. In some cases, the altcoin could even tag the $5 psychological level.
Also read: Tether ends USDT minting for Polkadot’s Kusama chain, BCH SLP and Omni Layer after nine years
DOT/USDT 1-day chart
While the optimistic outlook for Polkadot price sounds logical and possible, investors need to be cautious of Bitcoin. The pioneer crypto has a large swap on altcoins, including DOT. A sudden shift in trend or a sell-off in BTC could have a similar effect on altcoins.
In such a case, a daily candlestick close below the critical support level of $3.98 will create a lower low and invalidate the reversal thesis. This development could catalyze a 7% crash in Polkadot to revisit the $3.70 level.
Read more: Forget about price – Polkadot decoded 2023 says bear markets are for building
Author
Akash Girimath
FXStreet
Akash Girimath is a Mechanical Engineer interested in the chaos of the financial markets. Trying to make sense of this convoluted yet fascinating space, he switched his engineering job to become a crypto reporter and analyst.
