29 Interactions, 4 Today
Polkadot’s recovery has been consistent with that of the majority of altcoins in the market, which have rallied in response to Bitcoin’s recent recovery from $30,000. Its rise from a low of $10.3 on July 20 to $16.4 at press time represented a staggering gain of nearly 60% in 11 days. A closer look at its daily chart, however, appeared to indicate that the cryptocurrency is due for a retracement.
DOT was trading at $16.45 at the time of writing, up 11.2 percent in the previous 24 hours.
Polkadot Daily Chart
Polkadot’s chart highlighted several breakdowns since late-May. Its first decline was triggered when the price moved south from a symmetrical triangle, one which resulted in a 34% sell-off. The second came on the back of a horizontal channel breakdown – A move that resulted in another 30% retracement.
Its bounceback from 20 July’s swing low of $10.3 resulted in an uptrend which was a breath of fresh air in the market. However, at press time, bulls were under the threat of another correction as the price approached $17. This area clashed with the Visible Range’s POC. It also coincided with an upper sloping trendline that emerged post-DOT’s 19 May plummet.
Hence, there seemed to be a great chance that traders would sell DOT at this level to capitalize on their long positions.
Indicators v. Resistance?
At the time of writing, DOT’s indicators were pointing to a bullish story versus a strong resistance level. The Relative Strength Index surpassed 50-55 for the first time in over two months, while the Awesome Oscillator and MACD both indicated an increase in buying pressure.
While these are certainly encouraging signs, DOT must close above $17 to rule out a bearish outcome. Failure to do so may result in a retracement back to the swing low of $13.8 on May 23 and the 20-SMA (red).
As it approached the critical price ceiling of $17, DOT sent out positive signals. If the market is unable to maintain its rise above this level over the next 24 hours, the next market sell-off may occur. Traders can profit from this move by shorting DOT at $17 and exiting at $13.8. This would result in a gain of 18%.