Polkadot recovered from $17 in the last week, allowing the alt to form a higher high and maintain its uptrend. Prices were now trading within the confines of an ascending triangle, but the market was showing some warning signs. DOT was trading at $21.3 at the time of writing, up 3.9 percent in the previous 24 hours.
4-hour polkadot chart
On its 4-hour chart, DOT has formed two ascending triangles since early August. DOT’s first breakout resulted in a 10% price increase towards $21.6. In fact, DOT reached a new high of $21.6 in the last 24 hours, while forming new lows of $19 and $20.3. A close above the aforementioned level would now initiate its second breakout, from which a swing high of $24 on the 17th of June would be targeted. However, traders may have to wait a little longer before this pattern explodes to the upside.
While DOT has been setting higher highs, its RSI has been setting lower highs. The bearish divergence indicated that bulls were gradually losing market clout. This was also evident on the Awesome Oscillator, which failed to reach previous weeks’ levels.
Meanwhile, the ADX, which measures the strength of a current market trend, has been steadily declining. Given these considerations, DOT may form a higher low rather than an immediate breakout; however, any low formed above $20.5 would continue to support a bullish thesis. A drop below $19.5, on the other hand, would almost certainly result in a break from the pattern.
There were reasonable indications that DOT might lose steam in its pursuit of $24. Multiple bearish divergences were observed across its indicators, implying that further decline was to be expected. Meanwhile, a close below $19.5 would expose DOT to further drawdowns.