- Polkadot saved from a potentially massive breakdown by a key ascending channel.
- DOT/USD is not out of danger yet as long as the channel resistance is still intact.
Polkadot soared to new highs in August, allowing investors to diversify their portfolios as they seek alternatives to the major cryptocurrencies (Bitcoin, Ethereum, and Ripple). The token, however, hit pause on trading a monthly high of $6.79. The barrier opened the Pandora box as DOT plunged to levels slightly above $5.00.
Recovery from the dip has not been consistent as seen on the DOT/USD hourly chart. Although the lock-step trading sustained a gradually forming ascending channel. The channel resistance continues to make it difficult for Polkadot to rise above the critical $7.00 level. On the downside, its support has been instrumental in keeping bearish action in check in a bid to avoid acute losses.
At the time of writing, DOT is trading at $5.82. This follows a 5.94% retreat over the last 24 hours. The immediate downside is protected by the 100 Simple Moving Average (SMA). Moving averages are key indicators for support and resistance. In this case, if the price holds above the 100 SMA in the 1-hour range, there is a possibility that DOT will continue with the bullish price action currently targeting $6.00.
DOT/USD 1-hour chart
On the other hand, The Relative Strength Index (RSI) recovery from levels close to the oversold has stalled before the midline (50). Consolidation would take precedence if the RSI manages to hold above 40. This indicator highlights how strong a trend is but is used in conjunction with other technical signals and indicators.
For now, holding above the channel support essential for Polkadot. A break down below the channel support could push DOT/USD towards the next support target at $4.00. On the upside, trading above $6.00 (next resistance target) could pave the way for gains that will eventually bring down the channel resistance.
Polkadot Intraday Levels
Spot rate: $5.83
Relative change: 0.1295
Percentage change: 2.25%