Polkadot Price Prediction: DOT is poised for a significant correction to $16, suggests technicals

• Polkadot price seems to be on the verge of a massive correction as it is quite overextended.
• Several indicators and on-chain metrics suggest the digital asset must see a pullback before another leg up.
• DOT bears aim for a low of $16 if all the signals are validated.

Polkadot has reached a new all-time high on February 3 at $19.83 hitting a market capitalization of over $17.4 billion, almost surpassing XRP which stands at $17.8 billion. Unfortunately, many on-chain metrics and indicators show that Polkadot must face a correction.

Polkadot price can quickly fall towards $16

On the 4-hour and 6-hour charts, the TD Sequential indicator has presented two sell signals and it’s about to do the same on the 1-hour chart. Three calls in a row is an extremely bearish indicator that increases DOT’s selling pressure by a lot. 

DOT sell signals

Additionally, DOT has experienced a massive spike in its social volume which is often a big indicator of a potential pullback just like it happened back on January 16 and December 31, 2020. 

DOT Social Volume

On the 4-hour chart, Polkadot continues trading inside an ascending parallel channel after getting rejected from the top trendline resistance at $20. In the past, a rejection from the upper boundary has always pushed DOT towards the lower trendline.

DOT/USD 4-hour chart

Since Polkadot price got rejected again, it will most likely fall towards the lower boundary of the pattern which is located at $16. 

DOT/USD 4-hour chart

However, there is always a chance that the bulls crack the upper trendline resistance at $20. This breakout would have a price target of $24 which is a 20% move from $20.