Bitcoin (BTC) has already made significant strides this year, but altcoins are catching up. Once the price of Bitcoin starts to stabilize, the market environment gets better for altcoins to begin with.
One of the strongest players in 2021 is Polkadot as this cryptocurrency has hit new all-time highs day in and day out. Polkadot’s price increased by 85% in 2021 and 75% in the past seven days, outperforms XRP in market capitalization.
DOT price eyes $ 20 or higher after this rally
The Polkadot daily chart shows a rounded bottom construction during the last quarter of 2020. Since then, there has been a nice turn in support / resistance at the USD 4.55 level, which has led to more upward strength.
This upward continuation started with a massive rally to $ 10, after which demand (gray box) for support persisted and new levels could be defined using the Fibonacci extension.
One of those regions was found at $ 14.25-14.75, and the second was found at $ 16-17, as the graph shows.
The primary question currently is whether DOT has completed its current run. If so, the regions of interest for support / resistance flips can be found at the Fibonacci levels of 0.35-0.382 and 0.618-0.65.
These Fibonacci levels are often used to predict where such corrections may change course. In the case of Polkadot, these are closely aligned with previous support or resistance levels, namely the areas of USD 13 and USD 10.50. This is where traders should keep an eye out for possible buy-the-dip opportunities.
Again, Polkadot will most likely only correct when Bitcoin starts to decline significantly. Otherwise, Polkadot and many other altcoins are currently in a good position for more upside potential.
However, if a correction occurs and Polkadot hits a bottom, new levels of interest can be defined in the graphs for the next impulse movement. In that case, Polkadot could continue its rise to $ 23-24 and possibly even $ 32-35 later in the year.
DOT / BTC is approaching critical resistance zone
The daily chart of Polkadot in the BTC pair has seen a massive increase in recent days. However, this wave is approaching a significant resistance zone.
It is common sense and should go without saying, but it is not recommended to introduce a trade law if the price enters the resistance zone.
The 0.00045000-0.00047000 sats area is a critical area to break through as that would create another heavy boost upwards. If that territory breaks and turns for support, continuation is likely towards price discovery for Polkadot.
However, the price is unlikely to break upwards here. In that scenario, a healthy correction is possible as traders look to the 0.00035000 sats region, as well as the 0.00031500-0.00032250 zone.
The USD 15 support level is vital
The 2-hour chart is on a strong upward trend, but some critical levels need to be sustained for this rally to continue.
In that perspective, the previous high of $ 15 should maintain support. If that area holds, there will be a renewed rally of $ 20 or higher on the tables for Polkadot.
Not holding the USD 15 area for support and a significant correction is on the table. The next areas of support are at USD 12 and USD 10.75-11.25, which is a correction of 30-40%.
However, Polkadot shows that it has a lot of potential for the coming year with one of the biggest peaks to date in 2021.
The views and opinions expressed here are solely those of the writer and do not necessarily reflect the view of Cointelegraph. Every investment and trade move carries risks. You should do your own research when making a decision.