The price of Polkadot has broken out of the second continuation pattern in the last 20 trading days, indicating little investor interest in the digital asset.
Should a rebound materialize, the Bearish Death Cross triggered on June 27 provides a fresh obstacle to sustained price traction.
The line in the sand for this leg lower of the DOT correction is $12.75, which was reached on June 22.
Polkadot’s price did not differ from the minor rallies that accompanied most cryptocurrencies following their June 22 low. It was a particular disappointment for DOT investors, and it helped to pave the way for the July 8 breakout from a bear flag pattern. The breakdown is gaining traction, implying that the altcoin could be headed for fresh corrective lows in the coming days.
Despite a loss of almost -75 percent from the May high of $50.74, the bear flag pattern that occurred on July 8 when Polkadot pricing fell below the flag’s lower trend line was the climax of a crawl higher, suggesting no investor willingness to capitalize on the lower prices.
The bear flag pattern’s measured move goal offers two options. The first is the June 22 low of $12.75, which represents a 15% drop from the initial purchase price. The second, and considerably more aggressive, price target is $9.09, which represents a 40% drop from the July 8 entry price. The distance from the flag trough to high is 40 percent.
The 78.6 percent retracement level of the increase beginning in August 2020 and finishing at the May high of $50.74 would be wiped out by a Polkadot price collapse of 40%. Furthermore, it would represent an 82 percent drop from the peak of May 15 and would wipe out all of the 2021 gains dating back to mid-January.
Please look to the DOT breakdown from a symmetrical triangular pattern on June 18 if you have any questions about the potential for a 40% collapse. Over the next four days, the price of polkadot dropped by around 40%, setting a precedent for the current predicament.
Daily DOT/USD chart
Polkadot pricing needs to close above $14.85 on a daily basis to re-establish confidence in the stock. With a successful closure, the altcoin has the ability to advance to the significant resistance of the 50-day simple moving average (SMA) around $19.25, which corresponds to a sequence of wicks in late May and early June. Even so, the $14.85 trigger price would yield a 30 percent gain.
Polkadot price movement is still negative, with no clear indication of when the bears would scale back their objectives. Still, the approaching June 22 low of $12.75 might provide solid support and open the door to a bear trap that would catapult DOT higher in a sling-shot configuration. For the time being, if you are not actively trading the digital asset, it is advisable to wait and let the price levels specified determine your capital allocation./n
