Polkadot did not escape the bearish wave that hit the market on Thursday. The altcoin lost up to 33% of its value within hours and is trading at a weekly low of $4.28. As of writing, the DOT is avoiding $4.78 amid the struggle to continue the uptrend.
The Recovery of Polka Dots Becomes an Uphill Struggle
DOT/USD is struggling desperately to reclaim positions inside the ascending parallel channel on the daily chart. The longer the price stays below this key level, the stronger the bearish grip will be.
The Relative Strength Index has started to level up at the midline, hinting at sideways price action. In other words, the path of least resistance is neither up nor down, mainly due to low trading volume.
DOT/USD daily chart
Looking at the 4 hours chart, Polkadot seems stuck between a strong resistance and support area. The immediate upside is capped at the 100 Simple Moving Average, while the downside, the DOT holds above the 200 SMA.
DOT/USD chart in 4 hours
Closing the day above the 100 SMA might lift the DOT to the 50 SMA at $5.4, which may require more buy orders and force a resumption of the uptrend beyond $6. However, the RSI in the same 4 hours doubles the chances of consolidation.
On the other hand, if Polkadot closes the day below the 200 SMA, heavy losses could be triggered towards the next support levels at $4 and $3.5. For now, the sideways trading action might help restore balance before the breakout appears.