Polkadot (DOT) is currently testing a crucial support level as it remains locked in a long-term falling wedge structure. The pattern, visible on the 2-week chart, shows price compressing between two descending trendlines since the 2021 peak.
Historically, falling wedges reflect prolonged selling that gradually weakens, and this appears to be the case with Polkadot. Volume has steadily declined alongside the wedge, suggesting that the selling pressure may be losing momentum.
Polkadot has been parked close to a large support area at the bottom edge of its wedge. This area has been holding back falling prices in the past, as buyers have been entering to cushion the fall.
The recent candles are showing the first signs of accumulation, forming a small base following a strong fall. According to analyst Jonathan Carter, if DOT holds at the support area, the price may move in steps from $3.00 to $24.00 if the bulls make their presence felt.
Source: X
Also Read: Polkadot (DOT) at Make-or-Break Level as Price Hovers Near $2
Technical Indicators Signal Oversold Conditions
Despite the support, Polkadot still appears to be bearish in the short term. On February 1, DOT/USD dropped to $1.50, down 11.2% and close to the key levels last seen in October. As per Tradingview data, the cryptocurrency is currently below all the major exponential moving averages (20, 50, 100, and 200 EMA).
The RSI is at 26.33, indicating that the market is oversold. This may indicate a short-term relief rally, but the dominant trend is still negative.
The MACD is also indicating a stronger downtrend, as the MACD line remains below the signal line and the histogram bars continue to turn more negative. The Bollinger Bands have also expanded, indicating that the market is becoming more volatile.
Source: Tradingview
Polkadot (DOT) Resistance and Recovery Paths
For Polkadot to reverse its downtrend, it has to overcome some resistance levels. The first level of resistance is close to $1.88, which corresponds to the 20-day EMA. Then, the stronger levels of resistance are at $2.02 and $2.32, corresponding to the 50 and 100 EMAs, respectively.
The 200 EMA at $2.88 is a huge resistance level for any actual recovery. On the flip side, there is some psychological support at $1.40, and if it breaks below that, it might fall to $1.20, which was last seen in September.
Also Read: Polkadot (DOT) Forms Bullish Reversal Pattern as DOT Eyes $2.40 Resistance
