Polkadot Stays Bullish, Defends Bull Gap, Upside Forecasts

Polkadot has defended the bull gap set over the recent weekend and continues to build on the 2023 rally, boosted recently by the wider “risk on” theme seen across global asset classes since Friday’s release of the US CPI data. Here we look at upside forecasts for Polkadot (DOT) into January and Q1 2023.

Polkadot Defends Bull Gap

The cryptocurrency Polkadot (DOT) has today rejected a challenge this week to the bull gap that was established over the weekend, whilst the market was closed Friday-Saturday.

The bull gap (on IG.com) is at 5.61-42, which has been tested with a corrective dip since and this week, but with the rebound price action seen on Tuesday highlighting a reluctance and, for now, at least a rejection of a closure of this bullish technical signal, which would require a move below 5.42. This leaves both the short- and intermediate-term bias still bullish from the developments seen since the start of 2023.

Polkadot Builds on 2023 Bull Signals

The aforementioned Polkadot support gap that was established through mid-January is the latest of a string of both short- and intermediate-term bullish developments that have been seen since the start of this year. The early January rally from the end of 2022 bear market and cycle low at 4.22 initially closed a mid-December bear gap, then reversed above a downtrend line from November.

Last week, however, the recovery phase gathered pace both ahead of, and in the wake of the release of the US CPI data, which propelled wider global riskier assets higher, alongside the broad cryptocurrency markets. This sent DOT up through notable chart resistances at 5.25/36, and then with the bull gap above 5.73, 6.05 and 6.17 barriers, to a Saturday 14 peak at 6.39.

In addition, the market has reversed above the bear trend line from August 2022, signalling a stronger, intermediate-term bullish reversal, and has now used this old resistance level as support with the dip back into the bull gap.

Polkadot Bullish Forecasts

Upside threats: The January risk is now for a DOT further push higher through 6.39 to challenge the pre-FTX collapse peak from November ag 7.41. Through here would then set up an even better recovery theme to possibly allow for a move closer to 8.05 and even towards 9.65 into Q1 2023.

Downside risks: A close of the bull gap below 5.42, however, would open up a corrective move back lower for Polkadot to 4.82, which we would look to hold. Surrender here would favour a retest of the bear market low at 4.22.