Polkadot (DOT) has broken out above a significant resistance level and is trading within a bullish pattern. The downtrend may have ended.
Weekly outlook
Polkadot (DOT) has fallen below the 20-week EMA since breaking below it in November 2021. This line has rejected the price many times and led to the yearly low of $4.22 in December 2022.
DOT then rebounded and broke out above the 20-week EMA with a large bullish candle. This is an important development because the 20-week EMA is often used to determine the long-term trend. Therefore, the long-term downtrend may have ended.
However, the price has been rejected by the long-term resistance zone at $7.4 and is currently attempting to flip this EMA line as support. If successful, the bulls will make another attempt to break out.
A break and close below the 20-week EMA would invalidate this possibility and indicate that the price will drop to the yearly low at $4.22.
Descending parallel channel
After the strong sell-off in May 2022, DOT price has been trading inside a descending parallel channel. This is a bullish pattern that often leads to breakouts in most cases.
However, apart from this bullish signal, Polkadot does not show any other bullish signals. Therefore, the price may continue to move within the channel for some time.
On the upside, the channel’s resistance line at $7.4 could provide resistance while the channel’s midline line at $5.2 could provide support if the price continues to decline.
Conclusion
The long-term downtrend of Polkadot may have ended. However, the next move is still undetermined due to neutral price action signals.
A bounce from the 20-week EMA will help the price retest the long-term resistance at $7.4 while a breakdown will lead to the yearly low of $4.22.
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This article was republished from azcoinnews.com