- Polkadot retreats from record highs at $30 amid widespread crypto declines.
- Support at the 50 SMA and the ascending channel’s middle boundary must hold to avert losses eyeing $20.
- Recovery to $30 will resume if the immediate support at $25 remains intact.
Polkadot has recently hit a new milestone at $30. The rally has been steady and consistent, especially in February. An ascending parallel channel also came into the picture, which helped control DOT’s downward price actions.
Polkadot has retreated from the all-time highs at the time of writing and is exchanging hands at $25. If the immediate crucial support fails to hold, the price will tumble toward $20.
Polkadot depends on crucial support to avert potential losses
The ascending parallel channel lower boundary in conjunction with the 50 Simple Moving Average (SMA) on the 4-hour chart provides Polkadot with immediate support. Failing to hold above this critical support will be a massive bearish signal.
On the downside, the next tentative support is the 100 SMA, near $20. If push comes to shove, the 200 SMA will come in handy to stop declines from extending below $20.
The Moving Average Convergence Divergence (MACD) adds weight to the bearish outlook. When used properly, the MACD strategy can help traders identify positions to sell the top and buy the bottom. The MACD line (blue) crossed under the signal line, suggesting that it was time to sell the top. For now, the least resistance path is downwards until formidable support is established.
DOT/USD 4-hour chart
Santiment, a leading behavioral analytics platform, shows that Polkadot attracts massive social media volume on its run-up to $30. The social volume model tracks the number of mentions of a coin on more than 1,000 crypto social media channels such as crypto subreddits, discord groups, and Telegram groups.
A sudden spike in the volume is not a bullish signal. Often investor sentiment flips bearish, and selling pressure begins to mount. Therefore, Polkadot’s retracement seems to have been validated and could continue if bulls fail to secure higher support.
Polkadot volume chart
Looking at the other side of the fence
Polkadot will avert the looming losses to $20 if the buyer congestion at the 50 SMA on the 4-hour is dispersed. This region is reinforced by the ascending channel’s lower boundary, suggesting that support could remain intact. A rebound from this support will pave the way for gains back to $30.