Altcoin Polkadot (DOT) is witnessing a significant decline of around 50% since its peak in February. Accordingly, it entered a downward trend that lasted for a year. This decline was largely driven by a descending resistance trend line that limited price action. So, is this a buying opportunity? Let’s look at the details.
Testing key support and resistance levels for altcoin DOT
There is an upward fluctuation that occurred recently. Despite this, the daily and weekly Relative Strength Index (RSI) of altcoin Polkadot remains below the 50 level. Thus, it points to a permanent downward trend in the cryptocurrency market.
During the month of September, there is a significant change in the price of the altcoin Polkadot. Accordingly, there was an important level earlier in the year that provided a solid foundation for the asset. This level has fallen below the horizontal support level of $4.30. Since the price has fallen below this level, a recovery is now on the cards. This level is expected to serve as resistance if a recovery occurs.
What does this level mean?
To evaluate potential future support levels, investors often turn to Fibonacci retracement levels, a widely used technical analysis tool. These levels indicate what will happen after a significant price movement for the altcoin in one direction. It shows that the price usually retreats partially to a previous level before resuming its original trajectory.
Based on these Fibonacci levels, altcoin Polkadot’s latest decline may find support at the 1.27 outer Fib level, which is estimated at $3.18, which is around 20% lower than the current price. The 1.61 Fib level is 50% below the current price of $1.90. Accordingly, if the downward trend continues, it will provide a stronger support zone.
Bearish outlook and possibility of reversal
Both the daily and weekly RSI for altcoin Polkadot are currently below 50. Accordingly, this situation continues the downward trend and strengthens the bearish sentiment. However, let us emphasize that RSI is a momentum indicator. It should also be noted that values above 50 indicate upward momentum, and values below 50 indicate downward momentum.
Despite the bearish outlook, a potential reversal will occur if altcoin Polkadot manages to break above the $4.30 resistance level and breaks the descending resistance trend line. In this scenario, the cryptocurrency will see a 40% increase towards the next resistance level at $5.70. When we look at Kriptokoin.com, altcoin Polkadot is facing a long-term downward trend. On the other hand, if key resistance levels are breached, a change in momentum will be on the horizon. Traders and investors will be watching closely to see if Polkadot can break out of its current downward trajectory.
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