Polkadot (DOT), the popular interoperability blockchain protocol, has entered a critical phase marked by low volatility and a potentially trend-changing pattern. After a period of strong revival, analysts are questioning if the bulls can overpower the resistance at $6.50.
Recovery or Relapse?
DOT enjoyed a significant upswing in recent weeks, but can this momentum be sustained? While the altcoin’s derivatives data hints at a slight bullish edge, a closer look reveals a complex scenario.
Key Juncture for DOT
Currently, DOT finds itself at a crossroads. The confluence of the 20-day and 50-day exponential moving averages (EMAs) coincides with a crucial resistance level of $6.50. This area will likely determine the direction of the price in the coming weeks.
For nearly three months, Polkadot(DOT) has exhibited a series of higher lows on its daily chart, bouncing off its near-term trendline support. A decisive break above or below this support is expected to trigger significant volatility.
Bruised but Not Broken
The reversal from the $11.50 resistance in March exposed DOT to a bearish onslaught, leading to a 45% value drop over the past three months. This decline came after DOT touched a two-year high earlier this year.
Finding solace near the $5.55 level, Polkadot(DOT) withstood two challenges from the bears in the past month. Notably, during this downturn, the altcoin fell below its critical 20, 50, and 200-day EMAs.
Hope Rekindled
The recent rebound from the $5.55 baseline has instilled renewed hope for a recovery. DOT has gained nearly 13% over the last three weeks and has repeatedly tested the $6.50 resistance, forming an ascending triangle-like structure.
A decisive close above this resistance could trigger a substantial uptrend. In this scenario, the first major hurdle would be the 200-day EMA at $6.80.
The Importance of Support
However, a price drop below the 20- and 50-day EMAs could delay the recovery. DOT would likely seek support at $5.55 before attempting another challenge at the $6.50 resistance.
Technical Indicators Offer Clues
The Relative Strength Index (RSI) finally managed to close above the 50 level, signifying a potential easing of selling pressure. However, for a sustained uptrend, buyers need to see a consistent close above this level.
The Awesome Oscillator (AO) closed above its equilibrium line but has shown some bearish signals in recent days.
Looking Beyond DOT
While the on-chain data suggests some bullish sentiment, particularly on exchanges like Binance and OKX, the broader market sentiment appears slightly skewed towards shorts in the past 24 hours.
Traders are positioning themselves for potential significant moves, favoring long positions to some extent. However, any trading decisions should heavily consider Bitcoin’s price action and the overall market atmosphere.