DOT collapse threatens beneath growing promoting strain

  • Polkadot stares into the abyss, especially when the rising triangular support is broken.
  • The Relative Strength Index increases the credibility of the breakdown after printing a bearish divergence.

Polkadot has pushed for rebound after last week’s rejection at $ 5.5. Support was welcomed above the 200 simple moving average on the 4 hour chart. However, the rally hit a wall at $ 5.25 calling for an increase in sell orders. A massive breakdown could come into the picture if DOT extends below the 200 SMA.

Polkadot is on the verge of a major collapse

At the time of writing, DOT / USD is dancing at $ 5. The 50 SMA limit the immediate uptrend and thus the ongoing retreat. To avert possible losses, Polkadot must hold over the hypotenuse of the ascending triangle.

Trading below the ascending trendline could trigger a surge in sell orders. As sales volume increases, Polkadot will be forced to take refuge at the 200 SMA as mentioned. However, it is likely that massive losses will come into play and keep an eye out for the next likely support between $ 4.3 and $ 4.5.

DOT / USD 4 hour chart

The Relative Strength Index adds credibility to the expected breakdown after pressure from bearish divergence. This divergence occurs when the RSI makes a series of lower highs while price makes a series of higher lows. This indicates a decrease in the volume of purchases and thus the likelihood of a correction.

DOT / USD 4 hour chart

DOT / USD 4 hour chart

It’s worth noting that the bearish outlook will be abandoned if DOT / USD holds firm on the hypotenuse. A reversal could come into play, especially if the price closed above 100 SMA for the day. Trading above the x-axis would push Polkadot on its way to highs around $ 6.5.

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