- Polkadot price climbed to 5-month and 2022 lows.
- DOT enters a supportive buy zone.
- The strong bullish reversal pattern on the point and figure chart is now active.
Polkadot price has come a long way since its all-time high, trading almost 61% below the all-time high in less than three months. Unfortunately, this week’s price action contributed a significant chunk to that loss, with a drop approaching a 25% weekly loss. However, support is likely to arrive soon.
Polkadot price is generating a rare and powerful bullish reversal signal
Polkadot price has a very exciting and bullish development on its point and figure chart despite the current bearish sentiment. In the point-and-figure analysis, two primary patterns signal bearish extremes. The first is a bearish spike pattern – each column of fifteen or more Os. The second is a bearish shakeout.
A bearish shakeout pattern occurs at the start of an uptrend, but initially acts as a short signal. The bearish shakeout requires a multiple bottom followed by at least two but no more than three Os below the multiple bottom. The Polkadot Prize fulfilled this pattern.
There is now a phenomenal hypothetical long setup with a buy stop order at $30, a stop loss at $22 and a profit target at $82. This trade represents a 6.5:1 risk/reward setup with an implied profit target of 200% from entry. The likelihood of hitting a profit target this far from entry is slim, but the range should give traders an idea of how expansive the move up can be. A trailing stop with three boxes would protect and post-entry profit.
DOT/USDT $2.00/3 box reversal point and mapping chart
There is no invalidation level for the buy entry in this hypothetical long setup. Since this is also a top pattern, the entry is always on the three-box reversal, no matter how deep it moves.