Polkadot Price is stuck in pennant formation with a breakout coming

Polkadot (DOT) price action showcases some easing in its evolution on the charts after the firm rejection it received in early May against the 200-day Simple Moving Average (SMA). Since then, it appeared there was nearly no end to the sell-off that brought DOT from nearly breaking above $6 to instead nearly breaking below $5. As DOT trades a bit sideways, bears and bulls are being pushed toward one another in a pennant formation that could end in a much more significant sell-off  with Polkadot saying goodbye to $5.

Polkadot price in dire need of a hot summer

Polkadot price is not enjoying the month of May as such with at the moment a near 10% loss that could double in the coming days. Polkadot and other known altcoins show a similar pattern where more losses will kick in. The pennant formation will act as a perfect condition to complete that second part of the sell-off.

DOT sees bears and bulls being pushed toward each other with the middle point near $5.30. Considering global market turmoil with the US debt ceiling debate and the US banking crisis keeping traders on high alert, expect to see more downside due to the break out of the pennant formation. Once $5.10 is met,  May’s current low will have been broken. Bears will say goodbye to $5 with $4.80 as the next handle looked to for support.

DOT/USD  4H-chart    

The pennant breakout could still go the other way and fall in favor of the Bulls. It does not come as a surprise that the Relative Strength Index (RSI) is near 50, which means that bulls have been buying in the past few sessions. In that case, to the upside, $5.74 is the level to watch which bears 10% of upside potential for bulls that stay in their trade.