Polkadot (DOT) has recently found itself at a critical juncture as bearish forces tighten their grip on the asset. Once eyeing a potential climb toward the $6 mark earlier this month, DOT has now slipped into a downtrend, with signs pointing to continued weakness unless a sharp recovery unfolds. Here’s an in-depth look at DOT’s recent price action, technical indicators, and the possible scenarios ahead.
DOT Fails to Sustain $5.60 Resistance
Earlier in the month, DOT rallied to $5.60, sparking hopes of a bullish breakout toward $6. However, this momentum proved short-lived as bearish pressure reversed the gains, dragging the altcoin into a descending pattern. Over the past seven days alone, DOT has shed over 10% of its value, signalling waning investor confidence.
The rejection at $5.60 has left DOT trading within a falling channel on the 4-hour chart, a pattern often associated with a bearish continuation. While this formation initially resembled a bull flag, the follow-through price action has invalidated bullish expectations for the short term.
Technical Indicators Suggest Bearish Divergence
One of the most telling signs of weakening bullish strength is the declining Chaikin Money Flow (CMF) indicator. Over the weekend, the CMF was positioned at a healthy +0.17, reflecting buying interest. As of today, however, it has dropped sharply to +0.08, a clear sign that bulls are losing control over DOT’s price trajectory.
DOT/USD 4-Hour Chart | Credit:TradingView
Complementing this bearish outlook is the Awesome Oscillator (AO), which has recently slipped into negative territory. The AO’s downward movement confirms the dominance of bearish momentum. If this trend persists without a reversal, DOT could find itself testing support levels near $4 or potentially lower.
Crossroads Between Correction and Comeback
Looking at the daily chart, Polkadot appears to be teetering on a pivotal support region. A closer examination of the Exponential Moving Averages (EMAs) reveals an interesting dynamic. The 20-day EMA has crossed above the 50-day EMA, a pattern known as a “golden cross,” traditionally viewed as bullish.
DOT/USD Daily Chart | Credit: TradingView
However, price action tells a different story. DOT has fallen below the 20 EMA and is nearing a breakdown under the 50 EMA. Should this breakdown occur, the current “golden cross” setup might fail to yield the expected bullish reversal. A decisive breach below the 50 EMA could open the door for a deeper correction, possibly taking DOT to $3.24 or even below the psychological $3 support.
Bearish for Now, but Not Without Recovery Potential
Despite the prevailing bearish sentiment, there’s still room for a potential reversal. If DOT manages to climb back above the 20 EMA and reclaims positive momentum, the price could rally to key resistance levels at $5.22. In an especially bullish scenario, DOT might even revisit $6.44 though such a move would likely require a significant shift in overall market sentiment and a strong influx of buying volume.
For now, however, the short-term trend remains tilted to the downside. Traders and investors should monitor key technical levels closely, particularly support near $4 and resistance around $5. A break below support could confirm further losses, while a move above resistance might revive hopes for a sustained recovery.
Polkadot’s price action is currently leaning bearish, weighed down by weak momentum and falling investor interest. With the CMF and AO both indicating declining strength and DOT teetering near critical support levels, caution is advised. While a comeback remains possible, DOT must reclaim key technical levels to escape the grip of its current downtrend.
