The Polkadot price has snapped higher and is seemingly breaking out. However, for the rally to take hold, DOT needs buyers to up their stakes.
Polkadot is trading at $13.2645, higher by $0.1043 (+0.79%).
Like much of the crypto market, the last couple of days have sparked a stunning reversal in the DOT price. From Tuesday’s $10.3500 low, Polkadot has increased 30% and is heading for its third consecutive daily gain.
The rally has recovered last week’s losses, and DOT has eeked a +0.39%, seven-day return. This recent positive performance has increased Polkadot’s market cap to just under $13 billion, ranking it the 9th-largest cryptocurrency project, behind Dogecoin.
Like many digital assets, Polkadot has reversed from major long term support, and subsequently, the technical outlook is encouraging.
However, as I stated in my report last week, DOT still faces some obstacles.
Until Polkadot reclaims the former horizontal support at $13.6200, the path of least resistance is definitely lower.
Despite breaking out of a downtrend, DOT has so far failed to convincingly clear $13.6200 and was rejected at this morning $13.6500 high.
Furthermore, a lack of trading volume suggests buyers are not yet convinced the rally has potential.
The first thing of note on the daily price chart is a rising trend line that has formed the basis for this year’s rally.
Today, the trend is visible at $10.3000 and was the catalyst for Tuesday’s reversal. Therefore, this should be considered a significant level of support.
Additionally, DOT has penetrated a descending trendline at $13.1000, in place from the May high. This is a positive sign for the bulls, and if the Polkadot price remains above this level, it should soon clear the $13.6200 horizontal resistance. In that event, the $17.2000-$17.3000 area looks like a logical target.
However, trend reversals are often accompanied by increasing trading volumes. This typifies long capitulation and a return of buyers. At the moment, volumes are not indicative of this. And therefore, the rally may falter.
Should DOT fall below the supportive trend line, it may soon return to the long term uptrend at $10.3000. Furthermore, a failure to hold this support would invalidate the positive outlook and suggest that the shorts are back in control.
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