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Polkadot Price Analysis: DOT to blow up after the launch of the upcoming parachain slot auctions

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  • DOT on the daily chart is facing strong resistance by the 200 EMA
  • DOT jumped from a low of $21.81 to a high of $24.74 in Thursday’s intraday session 
  • The DOT/BTC pair is trailing at 0.0005956 BTC with a slight gain of 1.11% at press time

What is Polkadot and how does it work? 

Polkadot is a multichain network that supports interoperability between wildly different chains and different properties including proof-of-authority chains suitable for internal enterprise networks. For the very first time in blockchain history, the blockchains will form one large inclusive interoperable multichain network of pool security. 

How is Polkadot different from other blockchains? 

Polkadot is a unique network that allows the transfer of data, money, and assets between different blockchains, Polkadot is different from other blockchains like Etherium, as it uses various blockchains instead of smart contracts, allowing developers a more granular approach to the design. 

Polkadot, like many other altcoins, has witnessed a ‘V-shaped’ recovery after last week’s market crash. As part of the rally, DOT staged a recovery of 37% since the fatal drop.

The daily chart highlights the fact that DOT is encountering dynamic resistance by the 200 EMA. The 200 EMA is notoriously invalidating the efforts of the bulls to push the price above the resistance of $24.74

The price action is exhibiting weakness as evidenced by a hammer candlestick at the critical resistance. The 12-hour chart has already positioned the bearish trend into play on account of a confirmation candle after the hammer. 

The price action has teamed up with the oscillator to device hidden bearish divergence. The Stochastic RSI is on the verge of transpiring a bearish crossover thus confirming that a bearish trend is intact.

In case the bearish trend continues to disrupt the momentum, a strong support cushion is placed at $15.10 which will be of assistance. 

The price action can move past the 200 EMA on the condition that the bulls step up. Such a plot twist will contradict the bearish outlook and cast an uptrend for DOT. 

The current price of DOT is $23.75 established on the back of a 6.49% increase in the last 24 hours. In the past 30 days, the price of DOT has decreased by $28.89% while its accomplishments on the 1-year time frame amount to 419.71%.

DOT is getting rejected by Bearish FIB 0.232 on the 4-hour chart 

TradingView

In addition to BTC getting rejected at $40,000, DOT is facing immense pressure in tackling the resistance of $24. This particular level is in confluence with the bearish FIB 0.0232 retracement.

With the price action dictating an inverse head and shoulder pattern, a bullish reversal at this point seems highly unlikely. 

On the upside, the one-hour chart calls attention to the fact that the price action is sustaining above the support trend line. Along with that, the 20 EMA has proved its consistency in providing support to DOT. However, the failure of either of these to support the coin will paint a bearish picture for DOT in the upcoming sessions. 

What are parachains and how will they affect the price of Polkadot? 

Parachains are the last piece of core functionality to be delivered as outlined in the whitepaper and will allow Polkadot to realize its scalable multi-chain architecture. After a period of testing, optimization, and auditing, parachains will be ready for launch on Polkadot and can be enabled via on-chain governance. Once parachains are live, the community will determine which additional features and network updates should be added over time. 

Indeed, the parachain slot auctions are the next big milestone on the Polkadot roadmap. The hotly anticipated rollout of parachains can be considered as good news for those hodling KSM and DOT tokens. 

SUPPORT : $15.10, $22.11
RESISTANCE : $24.74

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