Polkadot buyers recently struggled to surpass a critical resistance level at $7.5, resulting in a 7% decline in the cryptocurrency’s price. The selling pressure has intensified, leading to a bearish market sentiment. The price has now reached a crucial support level near $6.5, which is expected to counteract the selling pressure and potentially halt further declines. The upcoming price action will be crucial in determining Polkadot’s future trend.
A detailed daily chart analysis by Shayan reveals that buyers failed to reclaim a key resistance zone that includes the 100-day moving average at $7.6 and the Fibonacci levels between $7.4 and $7.8. The resistance is accompanied by substantial supply, indicating aggressive short positions in the perpetual markets. The 7% decline in price led to the cryptocurrency reaching a critical support zone near $6.5, which is filled with demand and could potentially halt further declines. However, if this support level is breached, the bearish trend may continue in the mid-term.
On the 4-hour chart, Polkadot’s price formed an ascending wedge pattern during a multi-month consolidation phase. After facing rejection at the $7.5 resistance level, the price broke through the lower boundary of the wedge, leading to the liquidation of long positions and a cascade effect towards the $6.5 mark. The price is now at a critical support region around $6.5, which includes prior major daily swing lows. A period of consolidation near this support level is expected before the next significant move.
Currently, Polkadot is undergoing slight consolidation near the $6.5 mark after experiencing a significant drop in price. Analyzing futures market metrics, specifically the DOT/USDT Binance liquidation heatmap, provides insights into potential price movements and liquidity pools. The heatmap indicates that the recent sharp decline absorbed significant liquidity between $6.5 and $6, leading to the liquidation of many long positions. However, there are no substantial liquidity levels below the $6 mark, suggesting a cooling-off period in the futures market. Significant liquidity near the $8 level indicates it could act as a resistance level if there’s a bullish resurgence in the mid-term.
In conclusion, Polkadot’s inability to surpass the $7.5 resistance level led to a 7% decline in price, intensifying selling pressure and indicating a bearish market sentiment. The cryptocurrency has reached a critical support level near $6.5, which is expected to counteract the selling pressure and potentially halt further declines. The upcoming price action will be crucial in determining Polkadot’s future trend, with a period of consolidation likely near the support level before the next significant move. Analysis of futures market metrics suggests potential price movements, with liquidity pools indicating support and resistance levels for future price action.
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