Last week saw Polkadot’s (DOT) price plummet by 18%, largely impacted by a global economic downturn on Monday, causing it to dip below the $5 mark for the first time since November 2023. DOT briefly hit $3.75 before recovering to its current trading value of $4.48. Despite the recent rebound, the cryptocurrency faces significant selling pressure, making it uncertain whether it can climb back to the $5 level.
What Do Technical Indicators Suggest?
Analyzing DOT’s daily chart reveals that the technical indicators point towards increasing selling pressure. The Directional Movement Index (DMI) shows the negative directional indicator (-DI) surpassing the positive directional indicator (+DI). This suggests that sellers have a stronger hold on the market compared to buyers, as evidenced by the -DI standing at 40.69, while the +DI is at 6.20. The growing gap between these indicators strengthens the downtrend.
Will Moving Averages Act as Resistance?
Additionally, DOT’s 20-day exponential moving average (EMA) and 50-day simple moving average (SMA) are positioned below the current price levels. The 20-day EMA, a short-term indicator, reflects recent price volatility, while the 50-day SMA provides a longer-term perspective. Both these moving averages could serve as resistance points, potentially triggering further selling pressure if bulls attempt to push the price above these levels.
Concrete Investor Takeaways
Investors should consider the following:
- Watch the DMI indicators closely for potential shifts in market sentiment.
- Monitor the 20-day EMA and 50-day SMA as key resistance levels.
- Be cautious of the price dropping to $3.59 if selling pressure continues.
- Potential price target could be $6.76 if a trend reversal occurs.
The technical indicators and moving averages currently portray a challenging scenario for DOT. The resistance at the 20-day EMA and 50-day SMA levels could continue to pressure the price downwards, possibly to $3.59, the lowest level seen in nine months. However, a market recovery could see DOT surpass its moving averages, aiming for a price target of $6.76. Investors must remain vigilant and consider these critical levels when making trading decisions.