Today, Polkadot [DOT] is once again in the limelight as the token shows signs of stabilizing after a prolonged period of decline on the charts.
Analyst Captain Faibik recently shared insights on X (previously known as Twitter), suggesting that DOT might be gearing up for a significant rebound in Q4. His analysis indicated strong indications of accumulation, hinting at a potential bullish rally on the horizon.
As of the latest update, DOT is trading at $4.32, marking a 2.27% increase over the past 24 hours. This uptick raises the question of a possible breakout, prompting a closer evaluation of the current market sentiment.
Breaking Out of the Downtrend: A Crucial Technical Development
Throughout most of 2024, the price of DOT has been confined within a descending channel, steadily losing value. Recent data, however, shows a bounce off the lower support line at $4.19, signaling a potential shift in momentum. A break above this descending channel typically indicates a trend reversal and renewed bullish sentiment.
The analysis also suggests that DOT may have established a bottom around $4, providing a strong foundation for further accumulation. If the breakout occurs, key resistance levels at $5 and $6 could pave the way for a potential surge towards $7 in Q4.
Whale Accumulation and Market Dynamics
On-chain analytics reveal an increase in whale accumulation of DOT, reflecting confidence in the long-term performance of the asset. The circulating supply of DOT stands at 1.492 billion, with a market cap of $6.44 billion.
Furthermore, despite recent market fluctuations, the $86.22 million in 24-hour trading volumes indicate sustained liquidity. Liquidations of $48.69k in short positions hint at a possible short squeeze scenario.
Assessing Momentum with Technical Indicators
The Relative Strength Index (RSI) has shown an improvement, transitioning from oversold territory to 60.81, suggesting a growing upward momentum.
Additionally, the Bollinger Bands (BB) point to DOT testing its upper band at $4.33, indicating increased buying pressure. A continued presence near the upper band could signify an imminent breakout.
Looking Ahead to a Potentially Bullish Q4 for DOT
With favorable technical indicators and rising whale accumulation, DOT seems well-positioned for a breakout in Q4.
A successful move past the resistance levels of $5 to $6 could drive prices higher, aiming for the $7 target, in line with historical trends. However, confirmation of the breakout is crucial to solidify the optimistic outlook for DOT’s performance in the upcoming quarter.