In sync with the broader market recovery, Polkadot [DOT] has surged after a four-month downturn, buoyed by post-election optimism that propelled it towards the $6 mark. Despite a brief three-day setback, causing a drop to $4.75 and daily lows down by nearly 7%, the token is currently trading at $5.64.
Common in the crypto realm, every price ‘dip’ signifies an opportunity for investors to elevate the value by establishing former resistance levels as new support zones. Should DOT adhere to this pattern, chances are ripe for surpassing the $6 mark and potentially setting sights on $7.
DOT’s Journey to Break the $6 Barrier: A Path of Consolidation
Interestingly, DOT’s peak near $6 intersected with an overbought RSI on the daily chart, indicating an overheated phase. This sparked fear among traders, prompting some to exit prematurely in anticipation of an impending correction.
An exit lacking robust buyer interest is often followed by a pullback whereas balance between buying and selling, known as consolidation, typically paves the way for a breakout.
Upon scrutinizing DOT’s daily performance, a retracement brought the price close to $4.775. Nevertheless, the subsequent emergence of two substantial green candlesticks, each exhibiting a higher high, showcases the bulls leveraging the price dip to acquire DOT tokens at reduced rates.
Undoubtedly, bull investors exhibit confidence in the long-term potential of Polkadot. Yet, this alone might not suffice to ensure a definitive breakout. Sustaining the price above $5 is pivotal for inducing consolidation, a precursor to a potential upward surge.
Rationale dictates that, compared to its counterparts, Polkadot is lagging in overall market progress, with several peers registering remarkable double-digit weekly hikes. This volatility renders DOT more susceptible to sharp fluctuations.
Thus, to avert panic-driven sell-offs, bulls must concentrate on upholding the existing momentum. Consistent accumulation is vital to thwart any reversal in DOT’s trajectory and stabilize its valuation, laying the groundwork for sustained advancement in the future.
The $7 Aspiration: An Ambitious Goal
Dot is displaying the typical characteristics of a healthy, growth-oriented retracement, with price expectations oscillating within a predetermined range in the days ahead.
This strategy is adopted by spot traders to sustain DOT’s consolidation, particularly amidst market uncertainties.
While the potential surge towards $7 predominantly hinges on Bitcoin surpassing critical psychological thresholds, the succession of consistent downward red candlesticks on the chart indicates a bullish sentiment, positioning DOT for a potential upswing towards $6.
Nevertheless, despite yearly net outflows hitting $16.3 million, DOT’s price response diverged from predictions. Although substantial net outflows generally signal aggressive accumulation, DOT witnessed a 7% decline, hinting at probable distribution by prominent HODLers.
Until this trend shifts, the likelihood of DOT targeting $7 remains uncertain.
Amid expectations of sustained purchases supporting Polkadot and affirming $5 as the new support level, substantial accumulation from major HODLers will likely dictate DOT’s proximity to $6. This scenario could transition once Bitcoin hits $93K, enticing significant investors to join the market.