DOT could correct to $40

• Polkadot price momentum has slowed after reaching new all-time highs.
• Buying has dried up, limiting near-term upside potential.
• A retest of the breakout above the Cloud on the weekly chart is likely.

Polkadot price is likely to close a gap that exists between the weekly candlesticks and the daily Tenkan-Sen. However, gaps do not last long between candlesticks and the Tenkan-Sen, so a mean reversion trade setup is likely.

Polkadot price faces drop to $40 to test as support

Polkadot price action has been extremely bullish, but it’s time for the bulls to show their conviction. Since the close of the October 15^th weekly candlestick above the Cloud, a significant gap between the weekly Tenkan-Sen has existed. Because those gaps do not last long, and because price has extended even further from the Tenkan-Sen, it is increasingly probable that closure of that gap is coming soon – and the weekend is a perfect time for such a move to occur.

The weekly Tenkan-Sen and the top of the Cloud (Senkou Span B) share the same $40 value area. Because of that shared price level, Polkadot price should find many buyers at that level. Additionally, the upper portion of a high volume node in the 2021 Volume Profile is there as well. If the bulls defend $40 as support, then another leg higher towards new all-time highs will begin.

DOT/USDT Weekly Ichimoku Chart

The following primary support level to watch is at $32. $32 is easily the most substantial price level on the weekly chart as it contains the 2021 Volume Point Of Control, the weekly Kijun-Sen, and the bottom of the Cloud (Senkou Span A). While $32 is strong, bulls should be cautious of any push over the weekend that could extend a Polkadot price close below the Cloud. A close at or below $31 could trigger some responsive selling in the form of a stop run.