• Polkadot price forms a potential double-bottom pattern after another 10% crash on Monday.
  • A buy signal presented on the four-hour chart indicates a possible bullish trend reversal.
  • DOT price must keep the buyer congestion zone at $6.00 intact to validate an incoming upside move.

Polkadot price is at the tail end of a lengthy seven-day drop. The sell-off worsened over the weekend amidst a sell-the-news initiative in the wake of the Ethereum Merge on Thursday. Although the largest smart contracts token had a successful migration to a proof-of-stake algorithm, the cryptocurrency market turned bloody. The parachains’ token is dancing at $6.30 during the American session on Monday – slightly on top of robust support roughly at $6.00.

Polkadot price prints a crucial double-bottom pattern

Recovery is in its initial stages, as reflected by a bullish candlestick on the eight-hour chart. Odds will likely continue favoring bulls if Polkadot price confirms a double-bottom pattern – shown below.

It is worth mentioning that this chart pattern is a trend reversal formation – allowing traders to take strategic long positions. The pattern occurs after an extended downtrend, as long as the two valleys (bottoms) form at a relatively equal price point (solid support area).

An uptrend builds as soon as the bottom area support is defended. Nevertheless, the double-bottom pattern will only be validated when DOT price breaks above the neckline ($9.71). In other words, traders must wait for the pattern’s confirmation before entering their long positions. An established break above the neckline could propel DOT price by 37.00% to highs marginally above $10.00.

DOT/USD price chart

DOT/USD eight-hour chart

The path with the least resistance is on the upside based on the Stochastic oscillator applied to the same chart. As the index lifts from the oversold region (20.00 and below), Polkadot price is bound to regain positive momentum. Affirming this bullish trend reversal is the divergence created by the Stochastic above its moving average.

DOT/USD price chart

DOT/USD four-hour chart

Similarly, the TD Sequential indicator recently added credence to the Polkadot price bullish outlook by flaunting a buy signal. The call to buy DOT manifested in a red nine candlestick, implying that the downtrend was in its final stages.

It also signals buyers are ready to resume control for a significantly bullish outcome. A buy order is usually recommended when the low of the sixth and seventh bars is exceeded by that of the eighth and ninth candles.

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 Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Weekly Forecast: BTC’s Q3 close and what to expect in Q4?

Bitcoin Weekly Forecast: BTC’s Q3 close and what to expect in Q4?

Bitcoin price is trading above two crucial levels, suggesting a stable foothold. Combining this outlook with a bullish divergence signal, BTC holders should expect a favorable outcome. However, since the third quarter will end in a few hours, there is bound to be abnormal volatility in the market, which could trigger massive moves in either direction, so investors need to be cautious. 

More Bitcoin news

Shiba Inu price: Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shiba Inu price: Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shytoshi Kusama, the project lead for Shiba Inu, has dropped a teaser about Shiba Eternity for the SHIB community. Proponents expect the launch of the collectible card game to be a bullish catalyst for SHIB.

More Shiba Inu News

Staking is coming to Chainlink this December as LINK price stands firm

Staking is coming to Chainlink this December as LINK price stands firm

LINK is trying to find its feet in the wake of declines that followed its rejection from resistance at $8.40. Bulls have managed to sustain a generally up-trending market and Chainlink is up nearly 17.50% from its September low at $6.56.

More Chainlink News

Ethereum Classic bulls take charge, a retest of $30 on the cards

Ethereum Classic bulls take charge, a retest of $30 on the cards

Ethereum Classic price ranges with no directional bias in sight. This trend could continue unless Bitcoin decides to do something. Regardless, investors should prepare for a minor downtrend before ETC rallies. 

More Ethereum Classic news

Bitcoin: BTC’s Q3 close and what to expect in Q4?

Bitcoin: BTC’s Q3 close and what to expect in Q4?

Bitcoin price has developed a bullish divergence with RSI, hinting at more upside. Despite the optimistic technicals, investors should expect volatile swings before the end of the third quarter of 2022. 

Read full analysis

BTC

ETH

XRP