The Polkadot price recovery is facing the biggest test yet at a crucial level of resistance. And after rallying 170% in a month, DOT might need a rest. On Tuesday, Polkadot (DOT/USD) traded above the 200-day moving average for the first time since June, which is undoubtedly positive. However, the rally is starting to look stretched, and $27.50 is a big hurdle to jump. Which could mean DOT needs to consolidate recharge the batteries before the next leg higher.
Three weeks ago, I outlined ‘Why DOT may have 45% more upside’, setting a $27.00 price target. This week, Polkadot exceeded that target, reaching $27.81 before reversing 20% to $22.30. However, this morning DOT is mounting another attempt at clearing the 200 DMA, and for the sake of the bulls, it must succeed.
Considering the Polkadot price was trading at $10.35 in July, its latest valuation is mindblowing. In the last four weeks, DOT’s rise has increased the protocol’s value by more than $15billion to its current market cap of almost $26.5B. Although still some way from May’s $44 billion top, the recovery is certainly encouraging. And if the renewed enthusiasm for cryptocurrencies continues, Polkadot may achieve a record valuation some time in the future. But a correction may come first.
DOT/USD Price Forecast
The daily chart shows that the 200-day moving average at $27.54 sits perfectly aligned with a robust horizontal resistance level. Not only did $27.50 provide the low in March, but it was also close to April’s bottom. Furthermore, Following the May collapse, DOT has been unable to close above the level.
Additionally, the Relative Strength Index reading of 77.10 suggests the recent rally may be unsustainable. Therefore, if the Polkadot price cannot clear the 200 DMA in the next few days, it may correct lower. An obvious target on a pullback is the 100-day average at $20.40, just above the psychological support of $20.00.
In saying that, Cryptocurrencies often pay no attention to the RSI and over-extend. If DOT closes above $27.54, the bulls will charge. And in this case, $32.00 looks like an obvious destination and following that, $40.00 is possible.
Polkadot Price Chart (Daily)
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