The DOT course is probably moving inside a descending bevel.
We see support at $ 3.80 and resistance at $ 6.40.
The price may have completed wave B with an ABC correction
The course Polkadot (DOT) bounced off a major support area and seeks to exceed its previous highs.
If it fails to break past its current resistance, it could again cause a rapid drop towards the $ 3 area.
The DOT price has been declining from its peak of $ 6.86 on September 1. This decline peaked with a low of $ 3.53 on September 5, and price has since been rising.
The rebound took the form of an upward wedge, which is normally considered a pattern of a bearish reversal. That said, the bevel resistance line has not been validated enough to be able to confirm it.
The closest support and resistance can be found at $ 3.80 and $ 6.40 respectively.
The shorter-term chart reveals another more recent range, located between $ 4.10 and $ 4.90. At the time of the layout of this article, the price had passed the $ 4.90 zone before validating it as support.
As long as the DOT does not fall back within this range, the most plausible would be that it shows an ascending continuity.
Crypto trader @TheCryptoDog shared a DOT chart and claims the price will climb back to its previous high at $ 6.80.
Technical indicators are bullish. The MACD is on the rise and is in positive territory. The Stochastic RSI has formed a bullish cross and is found rising, as well as the RSI.
So, as long as price does not move below that wedge or fall below the minor support at $ 4.90, it is expected to rise towards the $ 6.40 to $ 6.80 range.
The price likely completed a bullish, impulsive five wave formation (in black below), started on August 18 and ended on September 1 with a high at $ 6.86.
Since then, the price may have completed an ABC correction (in red) to the fibonacci 0.618 level of the entire downward movement, unless it is still in wave B of an ABC correction (in black).
Further analysis supports the second option, in which the course would only have completed wave B with an ABC correction. In this case, wave C could push the price down towards the range of $ 3.40 to $ 2.15.
This theory is mainly supported by the fact that the rise since September 5 seems corrective rather than impulsive. The fact that subwaves A and C (in red) have a ratio of 1: 1 suggests that the price may have peaked.
If the DOT exceeds the Fibonacci level 0.618 of the entire decline, at $ 5.59, this would likely nullify this scenario
In conclusion, the next direction of the DOT movement is unclear due to conflicting signals from technical indicators and the wave count. If it breaks the $ 5.60 area and validates it as support, that would suggest that the bullish option is more plausible. On the contrary, a decline below $ 4.90 would support a bearish scenario.