Technical Analysis: Polkadot (DOT)
DOT continues to grab the attention of retail. Is this thing just getting started or is the end near? Read more to find out!
Table of Contents
What is Polkadot?
DOT / USDT on the Monthly Chart
DOT / USDT on the Weekly Chart
DOT / USDT on the Daily Chart
Polkadot (DOT) continues to steal the spotlight. At the time of this writing, DOT is ranked as the 8th largest cryptocurrency according to Coingecko. The market cap is sitting around $41.5 billion.
Are we going to see another ATH or was this the bull run? Before jumping into the charts, let’s take a step back for a second and understand what the project is about.
What is Polkadot?
Polkadot is an open-source computing platform that allows other blockchains built on top of it, known as“parachains”. Allowing for automatic inter-chain transactions between themselves. In short, Polkadot is a scalable heterogeneous multi-chain technology.
Even “non-blockchain” systems can be plugged in. Some consider Polkadot an equivalent to a set of independent chains: Ethereum, Bitcoin, Avalanche. With some important additions; pooled security and trust-free interchain transactions.
What is DOT?
DOT is Polkdot’s native token. DOT has three distinct purposes:
- Bonding (new parachains being added and bonding tokens)
DOT holders have certain rights within the Polkadot platform, such as:
- The ability to participate as a: validator, collator, nominator, or fisherman.
- The ability to participate in the governance of Polkadot. This allows for participation in the relation to the global upgrades or changes to Polkadot.
Let’s go!!! We now have a better understanding of Polkadot (DOT), let's hit the charts!
DOT/USDT on the Monthly Chart
The log chart is our best friend, keeps things clean and simple.
Zooming out we can see the trend remains heavily in favor of the bulls. Higher highs and higher lows in Sept’20 / Nov’20 & May’21 / Aug’21. When taking a closer look we can also see price action has broken above the previous higher high and closed above it as well. Not to mention this month’s candle (Nov) is in the middle of retesting for support.
Some things I noticed from experience:
- The smaller the pullback (Sept’20 to Nov’20) the stronger the trend.
- The deeper the pullback (May’21 to Aug’21) the stronger the swing.
A fractal has been drawn from Oct’20 to Feb’21, the structure of the candles reminds me of the Jul’21 low we saw earlier this year. Two targets come from this monthly analysis: $75 around EOY and $210 (no timeframe, just some food for thought)
DOT/USDT on a Weekly Chart
Sticking with our log scale, and dropping down to our pattern timeframe.
The last time we were at this level we can see there was some indecision. The last time we broke the previous high was in September, followed by a 2-weeks of correction before continuing to the upside. We can see a close above the previous resistance from a couple of weeks ago. We now have roughly 3-days for this weekly candle to close.
If we see price fail to hold as support at this level we do have support at $30. The fractal is drawn from the Sept’21 reversal mentioned above to the local top. Ironically we also see a target in the $70 zone.
Are the charts trying to tell us something?
DOT/USDT on a Daily Chart
Shifting over to our trigger timeframe we get a more detailed picture of price action and its reactions to S/R zones.
Price has been respecting a bullish channel that was confirmed with the October double bottom. Keep all options on the table, there seems like there are (2) likely scenarios.
The question is will the channel support hold or do we revisit the $30 zone?
DOT is the native token for the Polkadot platform. Polkadot is an open-source computing platform that allows other blockchains built on top of it, known as“parachains”.
- DOT’s main purpose: governing, staking, and bonding.
- The monthly chart shows a healthy uptrend, with resistance being tested for support at the time of this writing.
- The weekly chart shows us we are sitting at a level that previously showed uncertainty.
- Taking a close look at the daily, we can see price is in a bullish channel with two likely scenarios on the table.
Remember that this is all based on the subjective views of the writer. As always do your research — youngcryptowolf 🐺
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