Polkadot Price Analysis: DOT Stuck in a Narrow Range as Recovery Delays
- Polkadot embraced support at $19 despite the resistance at the 50 SMA.
- The resumption of the uptrend depends on DOT making a daily close above the 50 SMA.
Polkadot has not made much progress following the massive downswing in May. The token dropped to $13.6 a few weeks after trading a new record high around $50. In the wake of the upswing, Polkadot swung upward but could extend the price action beyond $26.
The last few days saw overhead pressure mount across the board as DOT slashed the gains below $20. Support at $19 played a crucial role in ensuring that May lows were not revisited. Meanwhile, the price is teetering at $21, but the immediate upside is limited by the 50 Simple Moving Average (SMA) on the four-hour chart.
Polkadot consolidates ahead of another breakout
The short-term technical outlook shows that Polkadot might maintain sideways trading. It follows that a horizontal Moving Average Convergence Divergence (MACD) indicator adds credence to the consolidation.
The MACD is a momentum oscillator utilized in trading trends but rarely used in identifying overbought and oversold conditions. The indicator is created by a couple of trend lines oscillating with no boundaries. Note that the crossover of these two lines is a trading signal resembling that of the moving average system.
It is essential to remember that crossing above the midline (zero line) is a bullish signal, while crossing below the same line is a bearish signal. Moreover, when the MACD line (blue) crosses above the signal line, it implies that investors should consider buying.
On the other hand, the trend tends to flip bearish when the MACD line moves under the signal line. The trend is more or less sideways until the ranging action breaks, allowing bulls to focus on gains above $30.
DOT/USD four-hour chart
The Relative Strength Index (RSI) has a small bullish outlook, illustrated as the indicator moves above the midline. Gains beyond the 50 SMA could call more buyers in the market, validating the liftoff to highs above $30.
On the downside, the immediate support at $19 must hold to ensure that declines are controlled and perhaps, stopped completely. Otherwise, Polkadot will resume the downtrend back to $13.6.