The Polkadot price has corkscrewed itself to a crossroads and is approaching the end of a long term triangle trading pattern. Over the next two or three days, the pattern will end, forcing DOT to breakout. The only question is, in which direction?
After coming within a whisker of $30.00 earlier this month, Polkadot (DOT/USD) has traded broadly sideways. This was to be expected after the coins’ incredible recent performance. In the third week of July, as Bitcoin slid below $30k, DOT was close to $10.00. However, the wave of buying that lifted BTC above $50k saw Polkadot add more than 180%, increasing its market cap to just shy of $29 Billion. Despite retreating 15% since Polkadot ranks as the 10th-largest cryptocurrency project ahead of Uniswap (UNI/USD) and Terra (LUNA/USD).
The goal of the Polkadot protocol is to allow blockchains’ to communicate with each other seamlessly. Furthermore, the network, which promotes interoperability (connecting the dots), relieves the burden of one particular blockchain to cater to all. This enhances scalability and helps cryptocurrencies work as a team to achieve their potential. As a result, DOT is a hugely popular coin and is considered a major player in the crypto space. In the first five months of the year, DOT increased by nearly 800% to an all-time high of $50.75. Of course, like the rest of the market, the Polkadot price suffered heavy losses between mid-May and July, dropping more than 80% over the two months. As I type, DOT is around 50% of Mays price, which is unlikely to remain the case for long. So will Polkadot explode higher, or is another drop on the cards?
DOT/USD Price Forecast
The daily chart shows the Polkadot price is wedged between trend support at $24.00 and long term trend resistance at $27.50. I would consider the descending trend from the May ATH as the stronger of the two. However, the uptrend from July’s low has momentum on its side. Furthermore, the key 50, 100, and 200-day moving averages between $21.53 and $21.98 reinforce the support.
Right now, DOT offers no clues as to which trend will fall. Should Polkadot clear $27.50 on a closing basis, immediate resistance is seen at $30.00, and above that, the all-time-high is achievable. However, if the Polkadot price loses trend support, it should extend lower to test the tightly-bunched moving averages. And should they fail, July’s low could follow.
Polkadot Price Chart (Daily)
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