Recently, Polkadot (DOT) seems to be quietly brewing a bearish cup and handle pattern on the daily trading chart. Once this pattern is confirmed, it may indicate a downward trend in the DOT price. Now, let’s analyze this pattern in detail:
Pattern structure interpretation:
Cup part: First, a large and rounded top pattern comes into view, marking the gradual weakening of DOT's previous upward momentum, which encountered significant resistance in the range of $7.50 to $8.00, 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 becomes a key bearish signal, indicating that the market may be about to enter a new downward phase.
Key level analysis:
Neckline support: The yellow horizontal line at around $7.00 has become the key support level in the current market. Once the DOT price breaks below this line, it will signify the establishment of the bearish pattern, and the market may face further declines.
Measured moving target: By measuring the height of the 'cup' portion and projecting it down from the neckline, we can predict the potential downward space. This calculation indicates that the DOT price may fall close to the red support area around $4.70.
Bearish scenario outlook:
If the DOT price breaks below the neckline with strong trading volume, it will further exacerbate the market's selling pressure, driving the price quickly down towards the measured moving target. The red arrow clearly indicates this potential downward trend.
Conditions for pattern failure:
Of course, the market is always full of variables. If DOT can successfully hold the neckline and break through the resistance level of $8.00, the current bearish pattern may fail, opening up new space for DOT's rise.
Conclusion:
In summary, the current cup and handle pattern presented by DOT/USDT suggests that the market may be facing downward pressure. Once the neckline is broken, the DOT price may drop towards around $4.70. Therefore, traders should closely monitor the changes in trading volume after the neckline is broken to confirm the validity of this pattern and formulate appropriate risk management strategies.