The price of Polkadot (DOT) has remained within a long-term support level without experiencing significant volatility since the beginning of May.
However, there are bullish signals in both price action and RSI that suggest a bounce is coming.
Polkadot Price Is Above Support
Polkadot’s price has fallen since hitting an annual high of $7.90 on February 19. The price formed a lower high on April 18 (red icon) before resuming.
On May 12, the price dropped to a low of $5.11, inside the key support level of $5.20. It has been trading close to that level since then and may have formed a double bottom pattern on May 25th.
A double bottom is considered a bullish pattern, meaning that it usually leads to upward movements.
The daily RSI supports the possibility that the price will bounce. By using the RSI as a momentum indicator, traders can determine whether a market is overbought or oversold and decide whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is up, bulls have an advantage, but if the reading is below 50, the opposite is true. Although the indicator is below 50, it is increasing. More importantly, the RSI (green line) has generated a bullish divergence.
This is a type of event where a decrease in price is accompanied by an increase in momentum. It often results in bullish trend reversals.
DOT Price Predictions: Counting Waves Bounce
The technical analysis from the short-term six-hour time frame indicates that a bounce is likely. Technical analysts employ Elliott Wave theory as a way to identify recurring long-term price patterns and investor psychology, which helps them determine trend direction.
The wave count indicates that the decline since February 19 is a corrective ABC structure (white). Taken together, A:C waves had a ratio of almost 1:0.786.
If the count is correct, the DOT price could drop a bit lower, possibly reaching the 0.786 Fib support level at $5. Then, there is likely to be a significant bounce, one that could bring the price back to the wave B high at $7.
Despite this bullish DOT price prediction, the bearish trend will be below $5. In that case, the DOT price would be expected to drop to at least $4.20 and possibly lower.
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In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions.
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