Jonathan Morgan
Independent Analyst
- Polkadot price continues to coil into a tighter and tighter range, hinting a big move is coming very soon.
- Bulls keep DOT above key Ichimoku support levels.
- A return to $24 is critical before any new uptrend can develop.
Polkadot price action develops congestion before a major breakout
Polkadot price action, in many ways, is showing more bullish developments than many altcoins. Moreover, several time and price factors point to a very optimistic outlook for DOT in the immediate future.
From a time cycle perspective, Polkadot price is at the tail end of one of Gann’s most important Cycles of the Inner Year: the 240-day cycle, which Gann said is often a swing low if the long-term trend is bullish. March 17 is 240-days from the July 20, 2021 low. Very close to the critical Gann Seasonal Date of March 21.
DOT/USD Weekly Ichimoku Kinko Hyo Chart
The second time cycle of importance is the Kump Twist (black vertical line), which occurs this week. Kumo Twist’s are periods where Senkou Span A crosses Senkou Span B - changing the Cloud from red to green (or green to red). It can also signify a probable swing high/low if a market has been trending strongly into the Kumo Twist.
The time cycles all point to a change in direction for Polkadot price - which correlates perfectly with DOT’s Point and Figure chart.
Polkadot price continues to have one of the longest-lasting Spike Patterns on its Point and Figure chart of the entire cryptocurrency market. The beginning of the current O-column was first developed on November 3, 2021, with the last O column appearing on February 23d.
Since November 3, 2021, DOT has yet to have a reversal column of Xs develop. Although no time factor exists on a Point and Figure chart, the length of time without a reversal is notable and considerable.
A Spike Pattern is any column with fifteen or more Xs or Os. It represents extremes and overdone movements. The entry off of a Spike Pattern is the three-box reversal. Compared to other patterns in Point and Figure analysis, the Spike Pattern requires active management and is a more aggressive entry.
The theoretical long entry remains buy stop order is at $24, a stop loss at $16, and a profit target at $100. The profit target is derived from the Vertical Profit Target Method in Point and Figure analysis and should not be viewed as a target likely to hit anytime soon.
Because it is a Spike Pattern, the low of the current O-column is not known. Therefore, if Polkadot price moves lower, the entry and four-box stop loss moves in tandem with price.
DOT/USD $2.00/3-box Reversal Point and Figure Chart
Given the resistance levels that have been discussed in prior analysis and on the existing Ichimoku charts, the $35 to $40 value area is likely to stop Polkadot’s initial rally from the entry.
Additionally, because it is a Spike Pattern, the low of the current O-column is not known. Therefore, if the Polkadot price moves lower, the entry and four-box stop loss moves in tandem with price.
Downside risks could easily extend below the 2022 low towards the last high volume node from the 2021 Volume Profile at $10.00.
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