The previous two months saw bears establishing their regime, confirming increased vigor as the overall market sustained a breakout. The southbound journey had 38.2% and 23.6% FIB levels standing steady by denying DOT bulls trend-shift rallies.
The price structure presents an ideal pessimistic setup while DOT price movements constrict inside the bearish pennant setup. Reversals from the 23.6% zone will likely trigger possible drops for Polkadot in the upcoming sessions. While publishing this content, DOT traded near $9.58, losing 7.84% within the past 24 hours.
Polkadot 1 Day Timeframe
it might be lucrative to exhibit a conservative approach as far as market movements are concerned, considering current ups and downs in the market. The latest corrections dragged Polkadot towards 16-month lows on May 12, following a 55% decline within a week (between May 5 and May 12). Since then, bearish peaks have negated gradual improvements on the troughs. That had DOT printing a pessimistic pennant on its daily chart.
Moreover, the somewhat vertical flagpole preceding the pennant confirms sellers’ determination to extend the lower peaks streak. Also, the volumes maintained a plunging trend amid the pennant formation. Bearish pennants are often operative during such declining trends.
The 23.6%, EMA 20, and the 2-month trend-line confluence might see Polkadot eyeing the support at $8.6. Any decline beneath would present more shorting opportunities within the $7 – $8 territory. Meanwhile, improved broad market sentiment might mean bearish invalidations, triggering short-live upticks towards the 38.2% mark.
Reasoning
The Relative Strength Index’s latest outlook exhibited gradual growth. Meanwhile, its higher highs have bearishly deviated from DOT prices. That confirmed the near-term bearish edge. Bulls need a closing past the RSI’s trend-line resistance to annul these tendencies.
Moreover, the Chaikin Money Flow mimicked RSI, diverging. A closing beneath the zero line would authorize the bearish thesis outlined above.
Final Thought
DOT Might see a setback in the near term as the bearish pennant pattern approaches the three obstacle confluence. A closing beneath the pennant would see DOT testing the support at $8.6, then $7.3. Meanwhile, buying momentum resurgence can trigger a near-term rally towards hurdles near 38.2%. Lastly, investors should watch broad market sentiment for money-making moves.
