Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
Polkadot formed a rising wedge pattern, which generally sees the price drop toward the base of the pattern. This was on lower timeframe price charts, which meant that a pullback could be a decent buying opportunity. On the other hand, this bearish pattern could be invalidated with a strong push upwards by the price.
DOT- 1 Hour Chart
The $19.41 resistance level loomed large on lower timeframes for DOT. Moreover, the price formed a rising wedge pattern (white). This is a bearish reversal pattern that can see the price pullback while on an uptrend.
Based on the move from $17.11 to $19.54, a set of Fibonacci retracement levels (pale yellow) was plotted. At the same time, the $17.5-$18 area has acted as a zone of both supply and demand for DOT in the past week. This demarcated the cyan box as an area where bulls could take a stand.
On the other hand, the rising wedge pattern can be invalidated if DOT manages to flip the $19.41 resistance to support, and breaks out to the north of the pattern.
Rationale
Source: DOT/USDT on TradingView
The RSI on the hourly chart dropped toward neutral 50 even as the price attempted to push past the $19.41 level. This suggested waning bullish momentum even as the bulls tried to drive prices further higher. It was a similar story on the Awesome Oscillator.
Even though the AO remained above the zero line, it showed waning bullish momentum.
The OBV did not see a large drop yet and has been on an uptrend during the price’s formation of the wedge pattern.
Conclusion
The $18 area can be a place where DOT would drop to in the next day or two, and the $17-$18 area could be used to enter long positions on a pullback. The wedge pattern can also be invalidated on a session close above the pattern.
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