- Polkadot price attracts resistance at the 200-day simple moving average (SMA) while holding the dominant July ascending trend line.
- DOT retracement levels define a pivotal range that will determine the price direction for the weeks ahead.
- Polkadot price logs the fifth consecutive positive week for the first time with a gain of 19.51%.
Polkadot price has been a relative strength leader since the July low, recording a 185% gain at the August 21 high. Until August 20, the rally had been interrupted by only seven negative days, with only one day exceeding -4%. However, the intersection of the 200-day SMA with a series of highs in late May and early June has established the first serious point of resistance for DOT since the July 7 high of $17.88.
Polkadot price confronts an array of technical warnings
The first warning sign for a Polkadot price pullback is the existence of a bearish momentum divergence on the 6-hour chart at the rally high. The other bearish momentum divergences during the move on August 7 and August 11 evolved into 14% and 12% declines, but in neither case was DOT at an inflection point as is the case now.
A drop of 14% would position Polkadot price below the July ascending trend line and near the 38.2% retracement at $25.78.
DOT/USD 4-hour chart
On the daily chart, Polkadot price does not show a bearish momentum divergence. Instead, the daily Relative Strength Index (RSI) reached its highest reading since the February high, indicating an extreme overbought condition and increasing the potential for a DOT reversal. The extreme reading coincided with Polkadot price trying to capture the 200-day SMA and stretch to the 50% retracement of the May-July correction at $30.55.
The complexity of the price structure is intensified by Polkadot price congestion between the 38.2% and 50% retracement levels extending back to February that includes the late February low and the March and April lows. The importance of the price congestion was revealed when it rejected the DOT rebound following the May 19 collapse and two sprints higher in June.
Polkadot price needs to log a daily close below the 38.2% retracement at $25.78 and the July ascending trend line to confirm the cautious short-term forecast.
DOT/USD daily chart
To void the cautious outlook, Polkadot price needs a close above the 50% retracement at $30.55, thereby turning the resistance into support and clearing a path to the DOT all-time high of $50.74.
As explained above, the catalysts exist for a deeper Polkdot price retracement, including an extreme overbought condition on the daily RSI, a bearish momentum divergence on the DOT six-hour chart, the presence of two important retracement levels and a range of price congestion extending back to February. Once the weak holders are removed, Polkadot price can pursue higher prices.
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
Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms
Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.
Litecoin poised for double-digit decline after breaking ascending trendline
Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC
21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.