A cryptocurrency analyst has explained how Polkadot could potentially see a drop to this level due to a sell signal on its weekly price chart.
Polkadot Weekly Price recently formed a TD sequential selling setup
In a new after on X, analyst Ali pointed out that a TD Sequential sell signal for Polkadot has recently formed. The “TD Sequential” refers to a technical analysis tool generally used to identify likely reversal points in an asset’s price.
The indicator consists of two phases. In the first phase, called setup, candles of the same polarity are counted up to 9. After the ninth candle, it can be assumed that a likely reversal in price has occurred.
If the setup was completed while the overall trend was upward (i.e., the nine candles were green), the asset could have reached a top. Likewise, if the price had fallen, there could be a bottom.
The second phase, known as the ‘countdown’, begins immediately after the installation is complete and lasts for thirteen candles. At the end of these thirteen candles, it can be assumed that another likely reversal in the asset has occurred.
Recently, Polkadot’s weekly price completed a TD Sequential phase of the first type, as shown in the chart below shared by the analyst.
Looks like the cryptocurrency has seen nine green candles in this setup | Source: @ali_charts on X
As can be seen from the chart, Polkadot’s weekly price recently completed the TD Sequential start-up phase with green candles. This could indicate that a sell signal has now formed for the cryptocurrency.
In the same chart, Ali also plotted the data for the 100-day exponential moving average (EMA) for the asset, a level that has been a source of resistance in the past.
Interestingly, this TD Sequential setup completed just as the weekly price of the cryptocurrency has approached the 100-day EMA. “This could lead to a spike in profit taking, potentially pushing the DOT down to $7.50,” the analyst explains. From the current spot price, a drop to this level would mean a drop of more than 18% for Polkadot.
DOT is up almost 3% in the last 24 hours
Although these bearish developments have taken place in the weekly price of DOT, its value has still continued to rise over the past day as the price has now crossed the $9.2 level.
Below is a graph showing how Polkadot has performed over the past month.
The price of the asset seems to have shot up during this period | Source: DOTUSD on TradingView
The green returns over the past 24 hours are a continuation of the bullish momentum DOT has enjoyed over the past week, a period in which it is now up nearly 39%.
While the asset has been able to continue this run for now, the technical hurdles it faces in terms of the TD Sequential and 100-day EMA could mean that the top for the coin could be close.
Featured image of Traxer on Unsplash.com, charts from TradingView.com
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