Recently, Polkadot (DOT) seems to be quietly brewing a bearish inverted cup and handle pattern on the daily trading chart. Once this pattern is confirmed, it may indicate a downward trend in the DOT price. Let’s analyze this pattern in detail:
Pattern structure interpretation:
Cup part: First, a large and rounded top shape comes into view, indicating that DOT's previous upward momentum has gradually weakened and faced significant resistance in the $7.50 to $8.00 range, forming a phase top.
Handle part: Subsequently, the market experienced a period of slight consolidation or corrective rebound, but this rebound failed to break through the previous resistance area, instead forming a descending structure near the neckline, which became a key bearish signal, suggesting that the market may soon enter a new downward phase.
Key level analysis:
Neckline support: The yellow horizontal line located around $7.00 has become the key support level in the current market. Once the DOT price falls below this line, it will indicate the establishment of the bearish pattern, and the market may face further declines.
Measured moving target: By measuring the height of the 'cup' part and projecting it downwards from the neckline, we can predict the potential downward space. This calculation shows that the DOT price may drop to near the $4.70 red support area.
Bearish scenario outlook:
If the DOT price breaks the neckline with strong volume, it will further intensify the market's selling pressure, driving the price rapidly down towards the measured moving target. The red arrow clearly indicates this potential downward trend.
Conditions for pattern invalidation:
Of course, the market is always full of variables. If DOT can successfully hold the neckline and break through the resistance level at $8.00, the current bearish pattern may become invalid, opening up new space for DOT's upward movement.
Conclusion:
In summary, the current inverted cup and handle pattern presented by DOT/USDT suggests that the market may face downward pressure. Once the neckline is broken, the DOT price could fall towards around $4.70. Therefore, traders should closely monitor the volume changes after the neckline is broken to confirm the validity of this pattern and develop an appropriate risk management strategy.