Polkadot (DOT) price analysis: A bullish pattern is developing
Polkadot is attempting to form a bottom backed by fundamental developments
Polkadot has been a huge underperformer in 2022, but the price action of the past few weeks suggests that a bottoming formation is in progress. The buyers are attempting to push the price toward the overhead resistance as of 20 April 2022.
Tether, the largest stablecoin pegged to the US dollar, is launching on Polkadot’s “canary network”, Kusama. Tether will be launched on the Polkadot blockchain in due course.
Peter Mauric, head of public affairs at the Polkadot developer Parity Technologies, said: “Tether’s deployment on Kusama is a clear indication that there is interest in having it available to builders in the Polkadot ecosystem alongside the Polkadot-native options that are launching as well,” CoinDesk reported.
In another positive, Terra’s decentralised finance protocol, Anchor, which has about $16 billion in total value locked, is planning to integrate with Polkadot’s Acala network. The press release stated that both teams will “work together to stand up deep liquidity pools for aUSD and UST on Acala, serving as a gateway into the Polkadot ecosystem for UST users.”
Could new partnerships attract investors to Polkadot? Could DOT go up? Read the DOT price analysis to find out what the charts suggest.
Polkadot technical analysis: weekly chart
DOT’s price successfully retested the strong support near $17. This suggests that buyers are defending the level aggressively.
The price action on the DOT/USD pair shows early signs of an inverse head and shoulders pattern, which will complete on a break and close above the neckline. If that happens, it will suggest the start of a new uptrend. The pair could then attempt a rally toward the pattern target at $29.
The bears are likely to pose a strong challenge in the zone between the 38.2% Fibonacci retracement level of $30.40 and $31.32.
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This positive view will invalidate if the price turns down and breaks below the support at $16.91. Such a move will indicate the resumption of the downtrend. The pair could then drop to the next strong support at $12.
Polkadot technical analysis: daily chart
DOT’s price has been trading inside a large range between $16 and $23 for several days. Trading inside a range could be random and volatile. Hence, traders usually buy near the support of the range and sell near the resistance.
The pair recently rebounded from the support and the bulls are trying to push the price toward the resistance. The relative strength index (RSI) is near the midpoint suggesting a balance between supply and demand.
If buyers push the price above the psychological level of $20, the pair could rise to $23. A break and close above this resistance will signal a potential trend change.
Alternatively, if the price turns down from the current level, the bears will make one more attempt to sink the pair below $16 and resume the downtrend.
Polkadot: Buy or sell at current levels?
Polkadot’s price analysis shows a bottoming formation between $16 and $23. After rebounding off the support, the price is likely to rally toward the overhead resistance. The pair may start a trending move on a break above $23 or below $16. Until then, range-bound volatile price action is likely to ensue.
Whatever the outcome might be, your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you are about losing money. This analysis does not constitute investment advice. It’s important to make your own analysis before deciding to invest. You should never invest more than you can afford to lose.