Polkadot price is retracing toward a crucial support level after a recent run-up. A retest of this area will likely provide DOT with the necessary bullish momentum to kick-start another rally that will extend beyond the recent swing high.
Polkadot price rose 17% from December 31, 2021, to January 3 to set up a swing high at $30.88. This run-up faced exhaustion, leading to a 6% retracement to where DOT currently trades - $29.07.
The correction is approaching the daily demand zone, ranging from $26.23 to $28.15. A dip into this area of support will allow Polkadot price to regain the bullish momentum and kick-start its uptrend.
The first hurdle Polkadot price will face is $32.78, roughly 12% away from the current position. Clearing this area will provide DOT with a free space to climb higher and retest $36.89. Assuming Polkadot price tags the said barrier, it would constitute a total of 30% advance and is where the rally will face exhaustion as investors start booking profits.
On the other hand, there is a chance Polkadot price might stop its ascent after the retest of the $32.78 hurdle. Such a development indicates that the buying pressure is insufficient. In this case, an increased selling pressure of excessive take-profit activity could undo the run-up.
A four-hour candlestick close below the demand zone’s lower limit at $26.23 will create a lower low, invalidating the bullish thesis.
This scenario will likely open Polkadot price to revisit the $24.05 support level.
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