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Polkadot proved to be a bit of a rebel after some alts saw an extended decline after September 7th. DOT, defying the general market trend, began a robust climb that peaked at $38.4 — a near four-month high for the digital asset. Furthermore, its weekly gains of 30% considerably outperformed other coins in the top ten.
The long-term outlook for the world’s eighth-largest cryptocurrency was positive, thanks to robust on-chain metrics and development activity. However, some selling pressure was beginning to enter into the market in the short term, with the attention shifting to the lower trendline.
At the time of writing, DOT was trading at $36.6 after gains dipped to 1.8% over the last 24 hours.
Polkadot 4-hour Chart
DOT’s price has been oscillating within the limits of an up-channel since coming back from lows reached after September 7th. After DOT turned its 20 and 50 Simple Moving Average lines to bullish, it secured new highs and a new local top at $38.8. Since then, the market has lost some steam as DOT has moved closer to the midpoint of its pattern.
A close below $36.1 would pave the way for a new low at $34, from which a rebound is predicted. Furthermore, an early reversal would see DOT pick up from the mid-line and establish a new high near $40.
On the other hand, a bearish outcome would see DOT break below the lower trendline of its pattern. Such a move would see the price slip all the way to $31 or even $28.6.
The Relative Strength Index remained in bullish territory, but was going lower at the time of publication after crossing into the overbought zone. This indicated that stability was taking place. However, if the RSI falls below equilibrium and into the bearish zone, this could lead to a breakdown.
Meanwhile, the MACD was approaching a bearish crossover above its half-line, which is normally seen as a sell signal. Similarly, the Awesome Oscillator registered two lower peaks as upward pressure progressively decreased.
The market for DOT remained vulnerable to a short-term sell-off. As purchasing pressure relaxed across the market, 24-hour trading volumes fell by 36%. As a result, the price is likely to fall towards the lower trendline of its up-channel, from where a reversal is likely.
The aforementioned indications were still trading above their half-lines, suggesting that a prolonged sell-off was unlikely. To profit from DOT’s bull run, traders can go long after it reaches a new low of $34.1.