- Polkadot has reached extreme oversold levels, with RSI nearing historic lows and price testing major support at $3.25, hinting at a possible reversal.
- If DOT reclaims the $3.75 level, it could trigger a sharp rally toward $5, but failure to do so may signal continued weakness.
RSI Hits Historic Lows as DOT Tests Key Liquidity Zone
Polkadot (DOT) is hovering at a critical junction, with its price plummeting from a recent high of $7.67 to a swing low near $3.25. This prolonged sell-off has driven the Relative Strength Index (RSI) to historically oversold levels, raising the possibility of an imminent rebound. Market watchers are now closely monitoring whether a bullish reversal setup will form at these depressed levels.
Price Structure Signals Reversal Potential
The sharp downtrend has brought DOT to a major liquidity pocket around $3.25 — a zone that often acts as a magnet for price action before reversals. Despite a brief relief rally toward $5, which coincides with the value area high, the bounce proved unsustainable. Price action has since returned to the lows, but this retest could set the stage for a classic swing failure pattern (SFP).
Should DOT briefly dip below the $3.25 low and swiftly reclaim the $3.75 support, it could confirm the SFP and spark a move back toward $5 resistance. This would mirror historical behavior where Polkadot has staged short-term rallies from similar RSI extremes.
Capitulation Signs Could Precede a Sharp Move
Volume during the recent leg down has been notably low — a hallmark of capitulation. This decline in participation often signals trend exhaustion and sets up conditions for a sharp counter-move. With RSI nearing record lows and price sitting at high-timeframe support, DOT could be primed for a sudden upside move, especially if sellers are trapped beneath key levels.
Outlook: Bulls Eye a Breakout, But Confirmation Needed
Polkadot’s immediate future hinges on whether the $3.25 support holds or fails. A clean reclaim of $3.75 would hint at renewed bullish momentum and open the door for a recovery rally. However, a continued rejection below this threshold would reinforce bearish pressure. For now, all eyes are on Polkadot ability to carve out a bottom and challenge the resistance at $5.
With oversold conditions deepening and capitulation signs building, DOT may be nearing a reversal. But the bulls need to step up at these levels — or risk another leg down in what has already been a painful decline.
