Although the cryptocurrency market is not in the best possible condition, the Polkadot ecosystem continues to grow. The original asset, DOT, has seen its price fluctuate downward for several months. Is this the beginning of a long journey to hell? Or rather, will we see an upward recovery? In this new technical analysis, we will have the opportunity to study key levels in order to consider plausible DOT scenarios.
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DOT in trouble with bitcoin?
When analyzing the asset against the king of cryptocurrencies, we can see that it is a poor performer. Slant resistance exemplifies the trend with multi-month bearish tops. Having lost its pivot area at 5000/5100 satoshi, it acted as a resistance to DOT. Moreover, the second level was recently lost at 4,200 satoshis, which once again confirms the direction the asset is heading against bitcoin.
As it is currently “in the void” it will likely revisit 3,535 satoshis, a level not found since the double bottom of summer 2021. If this level drops, it is important to expect continued underperformance from the DOT against bitcoin.
Thus, the goal against Bitcoin is simple: to resume the first level at 4,200 satoshis and then, at best, to revive the pivotal area. This would make it possible to get a more robust DOT in the event that Bitcoin regains strength against the dollar. Of course, at the moment, nothing is certain because the Department of Transportation has not been able to appeal any major level against the crypto king.
Simple weekly range against the dollar?
Now we can make an interesting note to DOT on a weekly basis. It’s been in range since the beginning of February. It swings between a high of $23.19 and a low of $14.05. Since we are currently in the lower band, we can theoretically expect a bounce from the asset. We will have the opportunity to elaborate on this point in the last part which will be concerned with the daily scale.
In the event that the DOT breaks the lower bound down, the first downside target is the gray area under $10.15/10.75 as the price made a comeback during the summer of 2021. So it is an important level where buyers can emerge. In this context, the trend will be clearly bearish, which could lead the price to look for lower levels. This is a hypothesis that cannot be excluded.
Conversely, if we want an upward trend on a weekly basis, it will be necessary to break the upper bound up which is at $23.19, a technical area that was previously a support from August 2021 to January 2022. But why? Maybe we have an uptrend? This is simple and based on one element: the principle of a trend that is determined by rising tops and bottoms.
What is a DOT status on a daily basis?
On the daily level, we can see the recent loss of the support area at $16, dated January 21. The recent breakout has brought the price back to the lower band, which is what we saw earlier in the analysis. In the event of a breakout, we might consider going back to $13 before considering going back to $10.75. However, this is by no means a major area, it is important to know.
Conversely, if we play the bounce at this minimum, it will be necessary to resume the recently lost support as soon as possible. This can be seen as reintegration with power buying. In this case, how do you visualize the sequence of events?
If we want a return at the upper end of the range, DOT would have to break $19.68 higher, and this would trigger a potential intra-range reversal. Since the trend is currently down, a break of this level will allow for a whole new high. It is followed by a higher bottom than the bottom that appears to be happening at the moment, so we will have confirmation of a trend reversal. Of course, nothing plays. It will then be necessary to monitor the price action in the coming days.
Here we are at the end of this analysis for the DOT which is currently at the lower end of the weekly range. Are we on the verge of a bearish breakout that will take the DOT to levels not seen since last year? This is a very good question that we will be able to see more clearly this evening. In fact, at 8:00 PM, there will be the Federal Open Market Committee, which will make decisions and provide details about the rate hike. So we are on a crucial day that could determine the direction of the financial markets for the next few years. So be prepared and above all, do not take risky situations in a risky environment where volatility is likely to be high.
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