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Polkadot has the unenviable distinction of being the greatest weekly drop among the top 30 coins by market cap at the time of writing. Prices were trading in perilous territory below their 50, 100, and 200 Simple Moving Average lines, leaving them vulnerable to a greater drop.
A larger market rebound provided some solace, but the bulls still had their job cut out for them. Polkadot was trading at $15.2 at the time of writing, up 5% in the past 24 hours.
Polkadot Daily Chart
While bulls tried a steady market rebound, an ascending-channel collapse marked a key turning point. As DOT breached below its bottom trendline and moved back towards its 19 May low of $13.5, losses mounted to 35%. A single candlewick fell as low as $12.75, marking a near 5-month low for the digital currency.
Since the drop, DOT has mostly traded at the aforementioned defensive line, with neither side able to sway the market in their favour. The development of a down-channel increased the likelihood of an upward breakout, but numerous hurdles remained. The Visible Range indicated a strong degree of interest in DOT at $16.5, and a successful closure above this level may drive prices towards the $20-mark and the 20-SMA (red). The next hurdle was the $27 price barrier, which witnessed some interaction between the 200 (red) and 50 (green) moving average lines.
In negative territory, the Relative Strength Index pointed north. A break above the neutral zone indicates bullish vigour and the possibility of additional surge. The MACD line approached the Signal line, and a successful crossover would indicate a possible trend shift. The Squeeze Momentum Indicator, on the other hand, showed that bearish momentum might restrict bullish control in the future.
Given the foregoing, DOT does not appear to be ready for a positive breakout just yet, and gains may be confined to the Visible Range’s point of control around $16.8. If the negative trend fades, a climb towards $20 is possible in the following days. A closing below $13.3, on the other hand, may indicate problems for the cryptocurrency and precipitate another drop.
Waiting for a breakout above critical levels before entering a trade on Polkadot would be a safer choice. A closing over $17 may propel DOT to the $20-22 range, but another breakdown cannot be ruled out.