Polkadot (DOT) registered an impressive recovery over the weekend after dropping to an intra-day low of $3.82 on Friday, bringing its multi-year support level into focus once again.
However, DOT’s recovery has stalled during the ongoing session after it failed to move past the 20-day SMA, which is acting as a dynamic level of resistance.
Polkadot (DOT)’s Relief Rally Stalls
Polkadot’s push to $5 came to an abrupt halt on August 24 after buyers lost momentum after reaching a high of $5.11. As a result, sellers assumed control of the market, driving DOT down. By August 26, DOT slipped below the 20-day SMA after a 5.39% decline and hit a day low of $4.25 the following day. Buyers successfully stalled a further drop on August 29, and DOT posted a marginal increase on August 30. However, the beginning of September saw the advantage swing back to the sellers as DOT registered a significant decline of 4.46% on September 1 to slip to $4.07.
DOT spent the previous week in a downward trend and lost the crucial $4 level on Friday as it dipped to a low of $3.82 before posting a marginal recovery and settling at $3.96, a drop of 1.49%.
Support Holds Firm
Polkadot (DOT) has strong support at two crucial levels that buyers have done well to defend, allowing DOT to rebound from these levels. The first support is DOT’s multi-year support of $3.62, which was tested on August 5. DOT made a strong recovery after rebounding this level and surged to $4.88 on August 8. The second and more immediate support level is at $4, which was tested twice last week. Buyers entered the market as DOT dipped below $4 on Friday, allowing DOT to register an increase of 3.28% on Saturday and climb back above $4 to $4.09. DOT continued its upward trajectory on Sunday, registering an increase of 1.96% to settle at $4.17.
Source: TradingView
The current week began with buyers maintaining momentum as DOT registered an increase of 2.88% and moved to $4.29. Buyers also attempted a move above the 20-day SMA on Monday but were thwarted. With the 20-day SMA acting as a dynamic resistance level, buyers lost momentum, and DOT fell back into the red during the ongoing session. Currently, DOT is down by 1.40% and trading around the $4.23 mark.
What Next For Polkadot (DOT)
As we have seen, buyers are vigorously defending DOT’s support levels at $4 and $3.62. If sellers retain control, we could see DOT drop back to $4 and rebound. However, should this level be breached, the $3.62 support level will come into focus. On the other hand, buyers will do all they can to retake the session. Should such a scenario arise, DOT will push above the 20-day SMA. A break above this level opens the door for a move to $4.50. However, for this to happen, buyers must ensure demand does not dry up at higher levels. If DOT is able to close above $4.50, a move back to $5 could become a possibility. A bullish MACD currently gives the bulls the advantage.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
