Polkadot pricing is on the verge of breaking out of a bear flag pattern.
The majority of the profits from 2021 would be wiped out if the DOT measured move target is not met.
At $11.96, the 78.6 percent Fibonacci retracement level, a big drop may be avoided.
Polkadot pricing made a cautious recovery from its June 22 low, navigating a bear flag pattern typified by no end-of-day commitment and little volume. Today’s drop might trigger a breakout from the pattern, putting DOT on track for a 40% move from the lower trend line of the flag.
Polkadot price fell 56 percent in the second quarter, shattering support from the 200-day simple moving average (SMA) and most significant Fibonacci retracement levels. The Department of Transportation’s response to the second-quarter collapse was a 40 percent corrective comeback, exhibiting a bear flag pattern across many timeframes.
The bear flag pattern’s assessed advance is nearly 40%, implying a Polkadot price goal of $8.85. The layers of support given by the May 23 low of $13.59, the June 22 low of $12.75, and the 78.6 percent retracement level of the rebound beginning in August 2020 at $11.96 would be overwhelmed by a drop of that magnitude. In fact, the dip would nearly wipe out all of DOT’s gains in 2021, signaling a significant setback for the cryptocurrency.
If the Polkadot price closes below the flag’s lower trend line, which is currently at $14.70, it would inevitably result in a bearish outcome for DOT. The breakout should be accompanied by a surge in volume, validating the bearish projection.
Polkadot pricing fell by a comparable proportion between July 19 and July 22 after breaking out of a symmetrical triangle pattern, lending some credence to a forecast of a 40% drop. As a result, a precedent has been set for another DOT sell-off.
Daily DOT/USD chart
A daily close above the flag’s upper trendline, now at $17.90, would counter the bearish prognosis and point to Polkadot price testing the descending 50-day SMA at $20.24. The negative pressure of the moving average, as well as the recent bearish Death Cross pattern created on June 27, will make any further DOT rise difficult.
Polkadot pricing, to be sure, has set a trend for fast, outsized falls since the top on May 15, and this should not be overlooked. As a result, market participants have nothing to lose by waiting for the bear flag pattern to resolve and reach the ground floor. Of course, they may be obstinate and prevent another 40% drop in the stock market./n
