Polkadot shows bearish engulfing candlestick; hints at further downtrend

Polkadot fell sharply last week as the broader market extended losses at press time.

Bitcoin plummeted to $28,000, down 7% in the past 24 hours. All major altcoins are following the same path, recording losses on the daily chart.

Polkadot is trading in a downtrend line, although DOT tries to recover on the chart. The recovery could stall if buyers don’t return to the market.

The price of the altcoin is near its immediate support at $8.04.

The last time DOT was seen trading around this price was in July 2021. Over the past four months, Polkadot has seen a range-bound rally.

Over the past 17 weeks, DOT has traded between $24 and $16. Despite Polkadot’s revival, it’s too early to tell whether the coin will continue its northward move.

Polkadot Price Analysis: One Day Chart

Polkadot’s single-day chart is priced at $10.64 | DayDayNews Source: DOTUSD on TradingView

At the time of writing, Polkadot is trading at $10.64. DOT is down more than 12% in the past 24 hours, while the coin has lost nearly 30% of its market cap over the past week.

The downtrend line describes the bearishness, even as the coin attempts to rise above the immediate resistance line at $10.80.

Above the $10.80 price level, the coin has a target price of $13.22. To invalidate the bearish thesis, the coin must trade above $14.

The coin is showing a series of bearish engulfing candlesticks (green arrows) on the single-day chart.

The bearish engulfing candlestick marks the start of bearish price action and a continuation of the same.

In the event of a price reversal, if the coin manages to hold above the $13.22 price level, the other two resistance levels for DOT are at $16.06 and $17.46.

The coin’s trading volume is shown in green. This means that the coin is showing a change in price direction.

technical analysis

polka dot
Polkadot’s single-day chart shows a drop in buying pressure | DayDayNews Source: DOTUSD on TradingView

Polkadot has been oversold in the past few days, however, the purchasing power of the token is starting to increase.

The Relative Strength Index is up on the one-day chart. The RSI rose above the oversold territory as buyers started to enter the market.

Despite the price increase, buying pressure in the market remains low as token prices are still driven by sellers in the market. The Directional Movement Index depicts the price momentum of the market.

The DMI is negative on the chart because the -DI is above the +DI line, which means bearish price action.

Related reading | XRP flashes signs of recovery; where will it go next?

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Polkadot signals bearish price action on the one-day chart| Source: DOTUSD on TradingView

Polkadot is trying to recover on its charts as indicators reflect price action. Chaikin Money Flow depicts capital outflows and inflows.

On the one-day chart, Chaikin money flows have seen an uptick, indicating that capital inflows outweighed outflows.

Awesome Oscillator indicates the price momentum of the market. AO continues to flash the red histogram below the half line, which means that Polkadot is still in negative price direction.

Related reading | Bitcoin recovers above $30,000, has a bottom been marked?

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