After Bitcoin (BTC/USD) slid from $66,000 to $58,000 in just three days, Polkadot (DOT/USD) also plunged more than 20%. However, DOT is showing signs of reversal on Wednesday, which could present a compelling buying opportunity for investors. Polkadot is now sitting on a very important support level, and if a turnaround is confirmed from the $40 area, early buyers could see strong returns. Bulls are gradually returning as many tokens recovered from their intraday lows on Wednesday, and investor confidence improved while markets slowly recouped losses.
Let’s review the charts:
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DOT reached a high of $55 earlier this month but has since retraced back toward the origin of that rally. A reversal could occur soon.
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DOT found support around $40 and produced a candlestick pattern consistent with a potential bullish rally in the near term.
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If DOT can reverse here, a new all-time high may become possible. Investors should, however, watch the supply zone near $46, which could act as resistance.
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DOT has reclaimed the 50-day moving average, suggesting the correction might be over. The pullback bottomed near the 0.618 Fibonacci level, which often precedes upward moves.
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The RSI also hit a support area on Wednesday and has historically reversed multiple times from similar levels, reinforcing the possibility of a bounce.
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Traders may consider entries above $41.50, with potential targets at $46, $54, and even a new record high if upward momentum resumes.