- Polkadot price has formed a Doji pattern on the daily chart.
- Bollinger Bands continue to contract, reflecting the declining volatility.
- Daily volume has faded as the sideways channel has developed.
Polkadot price contraction since February 24 has put the cryptocurrency on course to trigger a squeeze formation in the next couple of days. Due to the previous robust uptrend, there is a high probability that the channel resolves to the upside.
Polkadot price about to add to the sizeable gains in 2021
Polkadot price is currently trading 17% below the all-time high established on February 20 at $42.20. It is remarkable considering the 40% crash in February after recording the highest Relative Strength Index (RSI) reading at 83.59 since Polkadot began trading.
Now that the extreme overbought condition has been released and the weak holders have been chased from Polkadot, it is time for investors to prepare for a squeeze formation. The upper Bollinger Band is only $0.239 away from closing inside the Keltner Band. A couple more days of tight price action should be enough.
The squeeze direction is never known for sure. Still, considering the long, powerful uptrend, it is a higher probability that DOT price will rally to the upside upon the formation being confirmed. Once the price has cleared the upper Keltner and Bollinger Bands on a daily close, it is open skies for the cryptocurrency to test $42.20, resulting in a 16.8% advance from the current price level.
However, there is far more upside potential for DOT price after clearing the all-time high. The 1.382 Fibonacci extension level at $48.174 and the 1.618 Fibonacci extension level at $51.86 are crucial areas of interest.
It is important to note that investors should initiate a position once the formation has triggered, rather than waiting for a breakout above the bands.
DOT/USD daily chart
If the squeeze formation resolves to the downside, there is significant support at the lower Keltner and Bollinger Bands’ confluence with the lower channel line around $32.00. Additional support surfaces at the 50-day SMA, currently at $21.92, and then the low of the February crash at $26.56.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Ripple on-chain metrics show bullish signs amidst legal struggle with SEC, XRP eyes recovery
![Ripple on-chain metrics show bullish signs amidst legal struggle with SEC, XRP eyes recovery](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Coins/Ripple/Ripple_Coin_31_02_XtraSmall.jpg)
Ripple made a comeback above $0.48 on Tuesday and hovers above that level in Wednesday’s European session. Ripple on-chain metrics such as transaction volume and Network Realized Profit/Loss have turned bullish, supporting a recovery in the altcoin.
Bitcoin price falls amidst German government transfers, miners activity
![Bitcoin price falls amidst German government transfers, miners activity](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bit-coin-symbol-flag-3d-illustration-59931110_XtraSmall.jpg)
Bitcoin (BTC) extends correction on Wednesday and hovers around $61,000 after finding resistance near the $64,000 level on Monday. Recent on-chain data indicates heightened selling activity from Bitcoin miners early in the week.
Crypto Today: Bitcoin erases gains from end of June, Ethereum declines while Ripple holds
![Crypto Today: Bitcoin erases gains from end of June, Ethereum declines while Ripple holds](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/Bitcoin_2_XtraSmall.jpg)
Bitcoin wipes out gains from the last week of June and falls below $60,000 on Wednesday. Ethereum and top altcoins ranked by market capitalization erased gains as the inflation outlook worsened. Ripple holds on to recent gains and hovers above $0.48 on Wednesday.
Three reasons why altcoins could shake off losses this week
![Three reasons why altcoins could shake off losses this week](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/cryptos_XtraSmall.jpg)
On-chain data from Santiment shows that altcoins are currently in the opportunity zone, or generating buy signals. The top three altcoins in the buy zone are Basic Attention Token (BAT), Chromia (CHR), and Highstreet (HIGH), per Santiment.
Bitcoin: BTC price correction could end in July, according to seasonal data
![Bitcoin: BTC price correction could end in July, according to seasonal data](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoin_5_XtraSmall.jpg)
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.