- Polkadot price momentum has slowed after reaching new all-time highs.
- Buying has dried up, limiting near-term upside potential.
- A retest of the breakout above the Cloud on the weekly chart is likely.
Polkadot price is likely to close a gap that exists between the weekly candlesticks and the daily Tenkan-Sen. However, gaps do not last long between candlesticks and the Tenkan-Sen, so a mean reversion trade setup is likely.
Polkadot price faces drop to $40 to test as support
Polkadot price action has been extremely bullish, but it’s time for the bulls to show their conviction. Since the close of the October 15th weekly candlestick above the Cloud, a significant gap between the weekly Tenkan-Sen has existed. Because those gaps do not last long, and because price has extended even further from the Tenkan-Sen, it is increasingly probable that closure of that gap is coming soon – and the weekend is a perfect time for such a move to occur.
The weekly Tenkan-Sen and the top of the Cloud (Senkou Span B) share the same $40 value area. Because of that shared price level, Polkadot price should find many buyers at that level. Additionally, the upper portion of a high volume node in the 2021 Volume Profile is there as well. If the bulls defend $40 as support, then another leg higher towards new all-time highs will begin.
DOT/USDT Weekly Ichimoku Chart
The following primary support level to watch is at $32. $32 is easily the most substantial price level on the weekly chart as it contains the 2021 Volume Point Of Control, the weekly Kijun-Sen, and the bottom of the Cloud (Senkou Span A). While $32 is strong, bulls should be cautious of any push over the weekend that could extend a Polkadot price close below the Cloud. A close at or below $31 could trigger some responsive selling in the form of a stop run.