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Polkadot (DOT), a popular cryptocurrency in the blockchain space, has been making waves with its innovative approach to interoperability and scalability. However, like any financial asset, its price movement is subject to various technical analysis patterns, one of which is the rising wedge chart pattern.
The formation of a rising wedge pattern on DOT’s price chart suggests that despite its recent upward trajectory, there could be a downturn on the horizon. Traders and investors often watch for confirmation signals such as a break below the lower base of the wedge to confirm the pattern’s validity and anticipate potential selling pressure.
Currently, the price of DOT is down by -0.13%, trading at about $7.13, with a market capitalization of over $10 billion and a trading volume of over $153 Million as of the time of writing. Although its market capitalization is down by 0.39%, its trading volume is up by 0.34% in the past day.
With the help of the 100-day Simple Moving Average (SMA), and Relative Strength Index (RSI), this analysis was carried out using both the 4-hour and daily timeframe.
Analytical View Of DOT’s Current Price Condition
Currently, in the 4-hour chart, DOT is still moving in a consolidation manner, with the upper base and the lower base of the wedge building up momentum below the 100-day simple moving average.
The 4-hour relative strength index is signaling that the price of DOT might break below the lower base of the wedge as the RSI line is seen trending a bit below the 50% level. From this RSI formation, it can be suggested that if DOT breaks below the wedge, it will begin to move downward toward the closest key support level.
Meanwhile, in the 1-day chart, DOT’s price is seen trending within the wedge but close to the lower base. The 1-day RSI also suggests that DOT might go bearish as the RSI line is attempting to cross below the 50% level. From this RSI formation, it is advised that investors should watch out for a break below the wedge before taking any sell positions.
Potential Price Action In The Event Of A Breakout
Presently, the crypto asset’s price is still moving within the wedge, and DOT will begin to decline in the direction of the $4.8 support level in the event that there is a breakout below the wedge. If the price falls below the aforementioned level, it might perhaps fall further to test the $3.5 support level.
On the other hand, if the price reverses course and breaks above the wedge’s upper base, it will begin to rise toward the $9,8 resistance level. Should it break above this level, Polkadot will go higher to test the $11.9 resistance level. In addition, DOT might see a stronger rise to test more significant levels if it closes above $11.9.
Featured image from Adobe Stock, chart from Tradingview.com
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