DOT price at New Year’s low; Bearish sentiment still strong

Polkadot (DOT) price is showing some bullish signs in the near term. However, the longer-term readings remain firmly bearish.

The weekly price chart is showing that Polkadot price is declining below a descending resistance line since reaching an all-time high of $55.09 in November 2021. The line was re-validated in April 2022.

So far, the DOT price has hit a low of $5.68 on October 13th. Lower was important as it confirmed a break above the $6.60 horizontal area. The area previously acted as resistance in August 2020 (red icon) before turning to support in July 2022 (green icon).

Now this area is expected to act as price resistance once again. It also coincides with the above descending resistance line.

Another important development is the bearish RSI reading. The indicator is below 50, following a descending resistance line and has not generated any bullish divergence.

So, the outlook from the weekly time frame gives a bearish Polkadot price forecast. In the most likely scenario, the price will decline towards the next nearest support area at $3.90.

Conversely, a weekly close above the $6.60 horizontal area and a descending resistance line would invalidate the bearish hypothesis and suggest that a bullish trend reversal has begun.

Can Dot price initiate a short-term breakout?

DOT price has been declining below a descending resistance line since reaching a high of $9.68 on August 13th.

On October 4th, Polkadot price broke this resistance line. However, it failed to maintain its upward momentum and fell below its pre-breakout levels shortly afterwards.

On October 13, DOT hit a low of $5.68, but bounced back shortly thereafter (green icon), creating a long bottom wick in the process. Nevertheless, DOT price failed to recover from its upward move and is currently trading at $5.95.

The daily RSI is bullish despite the failure to maintain the upward momentum. The indicator has generated a Bullish Divergence (Green Line) and has also broken above its Resistance Line (Black).

Although both of these are considered bullish signals, an RSI movement above 50 (green circle) would be required to confirm the bullish divergence (green line).

Therefore, while price action remains bearish due to the formation of persistent lower lows, the daily RSI readings are bullish and suggest a trend reversal is imminent.

If this happens, the main resistance area for the future price will be $7.70. This is the 0.5 Fibonacci Retracement resistance level and a horizontal resistance area.

However, bullish daily RSI readings are not enough to neutralize bearish DOT price predictions on the weekly time frame and bearish price action on the daily time frame.

When will the dot reverse?

Finally, there are some signs on the daily time frame that support the start of a move towards $7.70.

However, due to bearish longer term readings, a weekly close above $6.60 would be unlikely, despite the possibility of a wick above it.

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