Date: Wed, Jan 01, 2024, 04:52 PM GMT
The cryptocurrency market has begun the new year with a continuation of the bearish momentum that marked December. Bitcoin (BTC) has retreated from its all-time high of $108,000 and is now trading above $93,000.Amid this market correction, Polkadot (DOT) has faced substantial selling pressure, recording a 24% decline over the past month and trading at $6.79 at the time of writing.
Source: Coinmarketcap
Despite this, a promising technical pattern suggests a potential reversal might be on the horizon, as highlighted by prominent crypto analyst @JohncyCrypto.
Retesting Its Falling Wedge Breakout
Polkadot is currently in the process of retesting a key breakout from a falling wedge pattern on the weekly chart. This bullish formation typically signals a potential trend reversal, and the fact that $DOT is holding above the broken wedge adds weight to the bullish case.
At the current price level of $6.7, Polkadot is consolidating just above the breakout level. This zone is critical as it could determine whether the token sustains its upward trajectory or faces further downside.
Source: @JohncyCrypto (X)
According to @JohncyCrypto:
Polkadot has successfully broken out of the long-term descending wedge and is now retesting the breakout level.
The current consolidation above the breakout line indicates bullish strength.
If the retest holds, DOT could target resistance levels at $11, $16, and ultimately $24 in the coming weeks.
The 50-week moving average (MA 50) is also playing a significant role, and a sustained move above it could confirm a stronger bullish reversal. Volume spikes during the breakout and retest phases further support the possibility of upward momentum.
Could a Reversal Be Near?
The broader market context also plays a pivotal role. Bitcoin dominance currently stands at 57.89%. A decline in dominance could signal a shift of capital from Bitcoin to altcoins, benefiting tokens like Polkadot.
However, caution remains necessary. If DOT fails to maintain its position above the breakout level, the price could revisit lower support zones, with $5.87 or even $5.0 as potential downside targets.
Conclusion
Polkadot's successful breakout from a falling wedge and its ongoing retest signal a potential reversal and upward trajectory. At the current price level of $6.7, DOT is at a critical juncture, with key resistance levels at $11, $16, and $24 in sight. The coming weeks will be crucial in determining DOT’s future direction. Traders should monitor the breakout level closely as failure to hold could lead to further corrections.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making any investment decisions.
