Polkadot (DOT) has been demonstrating a weak performance for the past few days, which is not a good sign for the bulls.
Due to the repetitive negative price action, a pennant has been formed. This means that the same trend would continue in the upcoming days.
This is a clear indication that the bearish trend is not going to go away any time soon. It will take a while for the bears to lose their energy and rest, giving bulls the opportunity to form a strong rally.
DOT is facing a Negative Trend
It is not only the price action that is going in favor of the negative trend but the technical indicators are also falling in the same league.
The relative strength index and the moving averages for DOT are also moving in the negative territory. The RSI is showing no signs of “overselling” and the downslope movement of the moving averages is also very slow.
This indicates that the price of DOT would continue falling in the upcoming days, which is not a good sign for the bulls. It is the bears who currently have the upper hand and they may continue selling DOT.
This would keep pulling the trading price of DOT and the situation may not get better for the bulls any time soon.
It would require a great level of buying for the bulls to be able to bring DOT out of the bearish territory. If they are able to make it happen, only then the rally would persist.
Chances of a Major Crash
It is to be noted that the bears are currently not exerting their full selling power. They may be waiting to break below the pennant. If they happen, then the bears may demonstrate their true selling prowess.
In that case, the trading price of DOT may get pulled lower at a really fast rate. The bears may continue selling DOT, which may bring its value to a low of $5.32.
If nothing bullish takes place throughout this time, then the situation may get worse. With more sellers joining the trend, the trading price of DOT may fall to a low of $4.32.
If a Miracle Takes Place
Given the current circumstances, there is no hope for a bullish move in favor of DOT.However, if a miracle does take place and the bulls find their lost power without the bears showing any resistance, then DOT may surge higher.
In this particular scenario, the only level that the bulls may want to breach would be $6.22 (50-day SMA). It is a strong resistance level that would require a great level of buying for the bulls to beat the bears.
If they are able to achieve that, then the price of DOT may start moving higher and hit stronger resistance levels.