Polkadot (DOT) in price consolidation. And now?

The latest Polkadot (DOT) indicators signal that possible price consolidation is coming.

Network development activity has been declining for 13 consecutive days, indicating that DOT is losing its momentum. These metrics, along with the Relative Strength Index (RSI), suggest that there may be a test of the support level at $8.30 soon.

Falling network

Historically, DOT’s price movement is highly correlated with its network development activity. However, in 2024, it is possible to see a time when this correlation breaks down. Between January 14th and 31st, development activity grew 8.45%. However, in that same period, DOT went from US$7.33 to US$6.64.

Then, between February 11th and 19th, we had another occurrence of this phenomenon. DOT rose from $7.01 to $8.03. At the same time, development activity decreased by 12%.

This decoupling between these two metrics indicates that the price experienced all this growth in 2024 – from US$8.60 on January 1st to US$11.6 on March 13th – due to external factors.

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However, even though this happens sometimes, development activity is generally a good indicator of price movement. The metric has been falling over the last 13 days, which indicates that the network is unable to maintain its momentum and attract new users and developers. This can profoundly affect the price of its native token.

RSI indicates price stagnation

During DOT’s price jump between February 28 and March 14, when its price went from $8.45 to $11.72, the seven-day RSI was consistently above 70. The Relative Strength Index is an oscillator used to measure the speed and change of price movements. It oscillates between 0 and 100 and serves to identify overbought or oversold conditions.

For DOT, an RSI of 61 falls at the upper end of the neutral zone, which ranges from 30 to 70. Investors can consider an RSI around this level as a positive sign, although it is not extreme enough to trigger concerns of a reversal imminent because of overbought.

However, the indicator alone may not be the best signal to assert that DOT will enter an uptrend, as other indicators such as development activity and exponential moving averages (EMAs) are painting a bearish scenario. This signal conjecture could lead the altcoin into a consolidation phase soon.

DOT Price Prediction

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On the 4-hour chart, a short-term EMA has just crossed below a long-term exponential moving average. When this happens, it is called a “death cross” and is often interpreted as a bearish signal, suggesting that the asset may be entering a downtrend.

Not all short-term EMAs have crossed below the long-term ones, indicating that the trend has not yet turned fully bearish.

Regarding price movement, the chart shows that the price is currently in a downtrend, having recently fallen below the 20-day EMA. The support zone around $8.33 is critical; If the price falls below this level, it could indicate further declines, with the next support potentially around $7.75. This would be consistent with the bearish death cross signal. This would represent a correction of 13.7%.

On the other hand, if the price finds enough buying interest to reverse the trend, the first significant resistance it may encounter will be around $11. This level previously acted as support, which may now serve as resistance.

If an uptrend is strong enough to break this level, the next major resistance level to be faced could be at $11.9. This would represent a 32% price jump for DOT.