Polkadot was witnessing a steady uptrend after forming three consecutive higher highs and higher lows. A bounce back from the 200-SMA (green) now projected a fresh high above $38.6 before the next wave of correction hits the market.
If DOT is able to muster up strong volumes as it approaches the 78.6% Fibonacci level, a retest of May’s ATH could certainly be on the cards. At the time of writing, DOT traded at $35.2, up by 7.2% over the last 24 hours.
Polkadot 4-hour Chart
Source: DOT/USD, TradingView
Polkadot reset at its 38.2% Fibonacci level and embarked on an upwards run within a parallel channel. Now based on the Visible Range, DOT had surpassed a large chunk of selling pressure after surpassing the 61.8% Fibonacci level.
From here, the region between $41.3 to $50 presented little to no resistance barriers. Hence, expect this journey to be quickly achieved by bulls after gaining a foothold above the 78.6% Fibonacci level. However, DOT needed to scale past a key price barrier before achieving a this outcome.
A bearish double top at $38.6 would be a lucrative take-profit for investors longing DOT’s current bull run. This would allow investors to exit the market after bagging over 50% gains. In turn, the same could trigger a run down to the 50% Fibonacci level.
If DOT is able to overcome this scenario while keeping losses at a minimal, expect its bull run to continue at higher levels.
Reasoning
Based on the RSI’s parallel channel, the index was expected to revisit the upper zone after traversing past the mid-line at 57. This would translate to further growth for DOT within its current pattern. Moreover, the MACD was close to a favorable crossover and presented some buy signals.
Finally, the Squeeze Momentum Indicator noted receding bearish pressure and eyed a move above its half-line, which is a bullish development.
Conclusion
DOT was expected to form a new peak at $38.6 on the back of rising bullish momentum. Once bulls successfully negotiate past a double top setup and the 78.6% Fibonacci level, DOT would be in a prime position to retest its May ATH.
