Polkadot price set to book 8% gains on daily close above $6.23

• Polkadot price action was recovering from its 10% meltdown last week.
• DOT price sees bulls taking the lead and knocking on $6.23 for a break above.
• Should that break above be followed with a daily close as well, expect more gains to this week.

Polkadot (DOT) price action is back in the graces of traders, at least for now. Risk assets are seeing demand this week given the very slim economic calendar and tail risks on automatic pilot as no high-stakes level meetings between politicians are set to happen. A few small waves aside, this week should be smooth sailing for a small bull rally in an overall bear market environment.

DOT price set to rally despite bear market backdrop

Polkadot price saw a big meltdown last week on the back of UK politics and the possible breakdown of the UK bond market before the BoE stepped in firmly and offered a way out for many battered pension funds. As the dust settles after the appointment of a new UK finance minister, and given an overall very light calendar for the markets to digest, DOT price and other cryptocurrencies may welcome some short term bets and see a pop higher. 

DOT price action could hit $6.79 as two price caps  lie around that level. First, there is the 55-day Simple Moving Average (SMA) that has been capping the price action since August, then there is the monthly pivot, just a few ticks above, which is set to trigger enough profit-taking to refrain Polkadot price action from booking more gains, which are still likely to add up to close to 10% for the week.

DOT/USD Daily chart

One of the preferred bear trades for most of 2022 has been the rejection trade. Here bears let the price action rally a little bit, almost fooling bulls into believing that a turnaround is near at hand and then at key levels enter large volumes. Price action usually then nosedives into the ground on the back of the move. For DOT price, that would mean a firm rejection at $6.23 with a decline towards the monthly S1 near $5.50 and the low of October 13.