Polkadot (DOT) has entered a new price discovery area shortly after breaking its former ATH yesterday. On December 28, DOT painted a 30% daily candle which catapulted the project back to its old ATH.
Only a day later, the token has also crushed resistance and reached a new price record at $7.69. This has been the third time that DOT attempted to break heavy resistance at $6.7 which did not hold for long.
On December 28, the smart contract ecosystem protocol painted one of the largest green candles in its entire history. The DOT token increased by more than 30% in the span of 24 hours.
In the meantime, bulls have successfully waged a battle by breaking the former price record and reaching new highs. At the time of writing, a single token costs $7.33. The daily candle currently trades between two important fib lines.
One thing that investors should definitely note is that DOT’s explosive growth has only just started. Based on historic price action, traders should still have more fuel to continue running the rally. If that is the scenario, then the cryptocurrency might as well break the resistance that it met.
However, the sharp turn of events might frighten traders into thinking that this is a short-term deviation. After all, the RSI indicator shows that DOT exceeded the range and tapped 70. This may be a sign that the token’s momentum can stop at any moment.
Unlike ETH, DOT can rely on its diagonal trendline
Lower timeframes (1H) indicate that the digital asset can rely on a lot of support as it rests on a diagonal trendline. The PA is completely similar to ETH, except that the trendline acts as support instead of resistance. In this case, DOT has a lot more reason to breakout compared to its rival.
Fiblines also indicate that we have reasonable support at the exact same positions where the trendline is. As for resistances, Fibonacci tells us that $7.27 is the first major area after we break $6.82.
The hourly RSI has also calmed down in recent hours. If traders can ignite another spark of momentum, DOT then surely has a chance to break above its ATH. All technical indicators support this bullish case which gives bulls more credence.
According to Fibonacci levels, DOT will further face more resistance at $7.55 and $7.77. However, these levels might be easily broken considering that destroying the ATH means that the asset enters a price discovery area. Momentum might shift at that moment and reach parabolic rises. On that account, yesterday’s daily candle might only be the beginning.
As Defiye reported earlier Polkadot is making the next steps towards establishing its dominance in the smart contract ecosystem niche. On December 5, the team announced the Thousand Validators Programme aimed at bringing more high-quality nodes to its network.
If successful, the program would drastically improve the state, stability, and speed of the Polkadot blockchain. From a fundamental standpoint, this gives us even more reasons to believe in a new bullish trend. But if we wish to enter a price discovery area, DOT must at all costs cross above its ATH.