Connect with us

Analysis

Why DOT bulls should closely monitor this resistance range to remain profitable

Published

on

Source: Canva


Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

For over eight months, Polkadot [DOT] has been struggling to bring forth a change in the long-term bearish narrative. The last two weeks, however, have been somewhat hopeful as the alt finds a position above the basis line (green) of the Bollinger Bands (BB).

While the recent growth aided DOT’s move toward its immediate supply zone in the $8.6-$9.1 range, the sellers could aim to pose near-term hurdles. At press time, DOT traded at $8.62, up by 4.87% in the last 24 hours.

DOT Daily Chart

Source: TradingView, DOT/USDT

The revival from the alt’s 18-month low on 13 July has reignited the near-term buying pressure. This renewed force helped DOT flip its four-month trendline resistance (yellow, dashed) to support.

Over the last few weeks, DOT has been extending its bullish volatile break. As a result, it kept hovering near the upper band of the BB. Should the current candlestick reverse from the $8.6-$9.1 resistance range, DOT could see a near-term setback. In this case, Potential targets would lie in the $7.3-zone near the basis line of BB.

Traders/investors should watch for a reversal from the immediate resistance range to identify the chances of this near-term drop. Any bearish invalidations or premature bull runs could be short-lived by the $9.8-mark resistance.

Rationale

Source: TradingView, DOT/USDT

After escaping its sideways track for nearly a month, the Relative Strength Index (RSI) took a bullish stance and revealed an edge for the buyers. To alter this bullish outlook, the sellers needed to test and eventually breach the 56-mark support.

However, the Chaikin Money Flow (CMF) saw lower peaks while the price action marked higher highs. This affirmed a bearish divergence with the price. Similarly, the Volume Oscillator resonated with the CMF and confirmed a bearish divergence.

Conclusion

In view of the immediate resistance range, overbought readings on the BB, and the divergences on the indicators, DOT could see a near-term decline before picking itself up. The targets would remain the same as discussed above.

However, an overall market sentiment analysis becomes vital to complement the technical factors to make a profitable move.

Read the best crypto stories of the day in less than 5 minutes

Subscribe to get it daily in your inbox.


Please select your Email Preferences.

With a background in financial analysis and reporting, Yash is a full-time journalist at AMBCrypto. He has a keen interest in blockchain technology, with a primary focus on technical analysis of cryptocurrencies.

Click to comment

Leave a Reply

Your email address will not be published.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.