Why this is crucial for Polkadot’s next rally
Since dropping to $12.75 on 22 June, Polkadot has recovered some lost ground but its price remained pinched below a key resistance mark. As broader market cues dictate DOT’s movement for the moment, bulls prepare for a breakout over the longer run. At the time of writing, Polkadot traded at $15.5, down by 1.4% over the last 24 hours.
Polkadot Daily Chart
DOT’s daily chart still depicted a bear market as prices remained below their 20, 50 and 200 Simple Moving Average lines. Despite such negative sentiment, DOT bulls have attempted recoveries but gains have been limited to a resistance mark of $17.4.
Since DOT made higher lows in the process, an ascending triangle formed on its daily chart. The underlying assumption is that such a pattern usually sees a break to the upside, but certain conditions needed to be met for this to hold true in DOT’s case. To maintain a bullish advantage, buyers must seek to stop losses at 2nd July’s low of $14.5. A close below this level would threaten a 9% decline towards 22 June’s swing low of $12.75, which would also invalidate DOT’s favorable setup.
Relative Strength Index was still in bearish territory but noted an uptrend over the past few days. As the index continues its journey towards the half-line, selling pressure might look to disrupt its movement. A rise above 50-55 would heighten chances of a breakout above $17.4. The MACD had already registered a bullish crossover and buying momentum trickled into the market. Although the Aroon up (orange) was close to 0%, a rise above the Aroon down (blue) would signify the onset of a bullish trend.
A rise above the upper trendline of its pattern would boost DOT towards a resistance mark of $19.5 where some consolidation can be expected before the next upswing. As reiterated earlier, bulls must maintain DOT above $14.5 to heighten chances of a favorable outcome.
Polkadot was positioning itself for a breakout above its ascending triangle- a development that could trigger a 13% jump towards the $19.5-mark. However, chances of a breakdown cannot be discounted considering the present wave of selling pressure in the market.