Polkadot (DOT) Attempts to Reclaim Crucial Resistance Level
2 min readPolkadot (DOT) made an unsuccessful attempt at reclaiming the $15 resistance level on July 26.
However, DOT appears to be trading inside a bullish pattern, from which a breakout is expected. This could cause a reclamation of the aforementioned $15 resistance area.
DOT attempts to reclaim range
DOT has been moving downwards since reaching an all-time high price of $49.78 on May 15. It initially rebounded at the $15 horizontal support area, creating a long lower wick on May 13.
However, the price broke down on July 13 and eventually hit a low of $10.37 seven days later.
DOT has been increasing since then and made an unsuccessful attempt at reclaiming the $15 area on July 16.
Technical indicators are showing mostly bullish signals, but have not confirmed a bullish reversal. The MACD is increasing and has generated bullish divergence and the Stochastic oscillator has made a bullish cross.
However, the RSI is still below 50 and the MACD is not yet positive.
The next closest support area is found at $8.
Cryptocurrency trader @Trader_XO outlined a DOT chart, stating that it could return to the $20 range. However, in order to do so, it has to reclaim the aforementioned $15 resistance area. A look at lower time frames can help determine the liklihood of this happening.
Potential breakout
The six-hour chart shows that DOT has been trading inside a descending wedge since May 19. The descending wedge is often considered a bullish pattern, therefore a breakout from would be likely.
The two most recent touches of the support line have been combined with bullish divergences in the MACD and RSI. The latter has now moved above the 50-line.
Therefore, a breakout from the wedge is expected. This move could possibly take DOT to the $20.84 resistance level.
Wave count
The wave count shows that DOT has completed a bearish impulse with sufficient alternation between waves 2 and 4 that lasted from June 3 to July 20.
While the pattern resulting from the bottom is not yet clear, some type of retracement is expected, whether its an A-B-C structure or a bullish impulse.
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