Investors and speculators have been in LOVE with DOT since August. DOT has emerged as a sexy new smart contract platform featuring multiple sidechains that can be tailored for specific uses or used as a live testnet to speed development.
DOT surged to become a top-10 crypto seemingly overnight in August. It’s sitting at #6 on coin market cap as of this post. Fundamentally, it appears to be a promising project with a solid team. However, the parabolic price increase presents a dilemma for investors and traders looking for exposure.
2 basic crypto trading rules: 1) Don’t panic sell. 2) Don’t FOMO.
If you’re looking for a good entry point without FOMO’ing, check out the chart. The relatively limited price history muddies the picture, but it does appear to behave according to the Elliott Wave principle, form clear trendlines and break out from traditional consolidation patterns as expected.
Let’s check it out:
From left to right, we have a clear 5-wave move up which is labeled as wave 1. Check out the upward thrusts following the 2 bullish flags during the 3rd wave advance. A deep correction follows, which has the look of a 2nd wave, labeled as an a-b-c zig zag pattern.
We then are able to count a 5-wave advance with an extended 3rd wave. The wave proportions are a little odd. The alternate consideration is that the upward advance after wave c is actually a corrective wave within a double zig-zag. This would become the primary labeling if the low from early September is broken.
Until then, we’ll keep the bullish outlook of a small correction which should end within the next few days. A common retracement level is 61.8%, which would occur at $4.31. The high end of the expected move is $4.78 at the 38.2% retracement level. This literally just happened as I was typing, and there has been a small bounce off $4.78. We’ll see if it holds. May the force be with you.
Happy Trading!