The Polkadot (DOT) team has announced a partnership with Cardano to use Substrate, which led to the DOT price breaking out from a descending resistance trend line and reclaiming the $4.30 horizontal area.
The weekly time frame technical analysis shows that the DOT price had fallen under a descending resistance trend line since February. The decrease led to a low of $3.56 in October.
Polkadot Reclaims Long-Term Support
Additionally, the downward movement caused a breakdown from the $4.40 horizontal support area. This was a critical development since the area had previously provided support since the start of the year.
However, the DOT price has increased during the past four weeks. Last week, it broke out from the descending resistance trend line and reclaimed the $4.40 horizontal area. This indicates that the previous breakdown was only a deviation.
Cardano’s founder Charles Hoskinson, has previously been complimentary about Polkadot and a possible partnership, suggesting that it is “What Ethereum 2.0 should have been.”
DOT Price Prediction: Is This Beginning of Reversal?
Technical analysts employ the Elliott Wave theory to identify recurring long-term price patterns and investor psychology, which helps them determine the direction of a trend.
The most likely Elliott wave count suggests that the price completed a five-wave downward movement (white), starting with its all-time high in November.
If so, the Polkadot price has begun a new movement in the other direction. While it is uncertain if the increase is the beginning of a new bullish trend reversal or an upwards correction, both would lead to a considerable increase.
The bullish divergence that has developed in the weekly RSI since the start of the year also supports the ongoing upward movement. Such bullish divergence typically occurs at trend bottoms and precedes bullish trend reversals.
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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.