Polkadot (DOT) is on the move this week as the bears bring it back to a major area of interest on the charts. Is this a buying opportunity or will the bears take DOT/USD even lower?
Polkadot (DOT) shot up in October after the Polkadot team announced their parachain auction schedule, signaling further progress towards their vision of blockchain interoperability. The market shot up from the major support area around the $40.00 psychological level, eventually testing the $55.00 handle before topping out.
So far in November, that optimism seems to have faded fast with traders taking DOT/USD back to the major area of interest around the $40.00 handle, likely on the recent broad crypto pullback and as traders await the parachain auction results. Is this a buying opportunity or are sellers ready to break support?
With the parachain auctions drawing in billions of dollars to ecosystem projects and institutional capital flowing in as well (over $70M in 2021 so far), the odds are that fundamental traders will continue to see this asset as one to own for a longer-term play.
From a price action perspective, not only has that $40.00 handle proven to be a magnet for buyers in the recent past, but we can also see a bullish divergence pattern forming between the lower ‘lows’ price and the ‘higher’ lows in the stochastic indicator. This coupled with the long wicked candles may draw in technical traders looking to play that support area for both short-term and swing technical plays.
We’ll be watching DOT/USD to see if support does hold, and if bullish reversal patterns form, that could be the signal to start the next leg higher after the parachains event completes and if the broad market environment stays relatively risk tolerant.
What do you all think? Is the $40 area where DOT/USD will launch higher? Let me know in the comments section below!