Polkadot: Assessing whether DOT is really at the risk of a 16% sell-off
Polkadot was in a delicate position on the charts. Its price remained gridlocked between two important Fibonacci levels while the indicators flashed mixed signals with respect to its mid-long term trajectory. One on end, sellers would look to target a close below the 50% Fibonacci level which would expose DOT to a potential 16% sell-off. On the other, buyers would hope to regain command at the 38.2% Fibonacci level and target a break above $32.7. At the time of writing, DOT traded at $29.8, down by 8% over the last 24 hours.
Polkadot Daily Chart
A triple bottom around $26 kick-started a 25% run up for DOT but its ascent was cut short at the 23.6% Fibonacci level . A daily close below the 20-SMA (red) can enable a fourth retest of the 50% Fibonacci level, from where a breakdown would loom large. In case sellers manage to slice through this sturdy defense, DOT would be exposed to another 16% decline in value. Buyers can then look to respond within the Golden Fibonacci Retracement zone or target a potential double bottom setup at $21.8.
On the other hand, an immediate response at $28.9 price level could allow bulls to generate enough momentum to tackle the $32.6 price ceiling. A move above the immediate resistance could even culminate into a run up to $38.7.
Now the Relative Strength Index’s trajectory was a major concerning factor. Based on the RSI’s downtrend since late-August, DOT was losing the vigor to continue a run up to record levels. A move underneath 45 could transpire into further losses in the coming weeks and sellers reign in. Conversely, the MACD and Awesome Oscillator each eyed a move above their respective half-lines. These reading could attract some buying behavior moving forward.
Although the MACD and Awesome Oscillator eyed a comeback above their mid-lines, evidence was still inconclusive in order to back a bullish outcome. Instead, bearish readings on the RSI carried more weight especially after showing a clear trend over the past month and a half. If the market does play out in favor of the sellers, DOT was vulnerable to sell-off all the way towards the $22-mark.Source