- Polkadot price seems to be on the verge of a massive correction as it is quite overextended.
- Several indicators and on-chain metrics suggest the digital asset must see a pullback before another leg up.
- DOT bears aim for a low of $16 if all the signals are validated.
Polkadot has reached a new all-time high on February 3 at $19.83 hitting a market capitalization of over $17.4 billion, almost surpassing XRP which stands at $17.8 billion. Unfortunately, many on-chain metrics and indicators show that Polkadot must face a correction.
Polkadot price can quickly fall towards $16
On the 4-hour and 6-hour charts, the TD Sequential indicator has presented two sell signals and it’s about to do the same on the 1-hour chart. Three calls in a row is an extremely bearish indicator that increases DOT’s selling pressure by a lot.
DOT sell signals
Additionally, DOT has experienced a massive spike in its social volume which is often a big indicator of a potential pullback just like it happened back on January 16 and December 31, 2020.
DOT Social Volume
On the 4-hour chart, Polkadot continues trading inside an ascending parallel channel after getting rejected from the top trendline resistance at $20. In the past, a rejection from the upper boundary has always pushed DOT towards the lower trendline.
DOT/USD 4-hour chart
Since Polkadot price got rejected again, it will most likely fall towards the lower boundary of the pattern which is located at $16.
DOT/USD 4-hour chart
However, there is always a chance that the bulls crack the upper trendline resistance at $20. This breakout would have a price target of $24 which is a 20% move from $20.
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.